Hargreaves Lansdown: contrarian buy or a fallen star?
Leading retail investor platform Hargreaves Lansdown (LON:HL.) has seen its growth slow in recent years, as a raft of newer and cheaper competitors have entered the market. Relatively high prices and a lingering association with the Neil Woodford scandal may also be hindering sentiment towards the business. However, while Hargreaves undoubtedly faces some near-term challenges, trading appears to be stabilising. April’s third-quarter trading update was good enough to trigger a round of broker upgrades. Hargreaves’ historic DNA is as a low-cost innovator. Today the company is a hugely profitable market leader. If CEO Dan Olley can combine these strengths to rejuvenate the business, I believe the shares could be cheap on a medium-term view. In the meantime, I think Hargreaves £500m net cash balance and well-supported 5.7% dividend yield should help to underpin the stock’s valuation. Summary Pros: Market leader with near-40% shareVery strong profitability and good cash generationModest valuation if business can return to earnings growth Cons: May need to cut prices to become more competitiveOngoing legal action relating to Woodford affairHighly competitive marketplace, can HL attract new…
Source: https://www.stockopedia.com/content/hargreaves-lansdown-contrarian-buy-or-a-fallen-star-996576/
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