Hargreaves Lansdown: Bad News Priced In With FY22 Guidance; Rebound Ahead (Preview)

Company Update (HL/ LN) (Buy)

Summary

• Shares fell 11.3% on Monday after FY21 results, and are now 39% below their May 2019 peak, an opportunity for long-term investors.

• FY21 results were strong, with year-end assets 30% higher, revenues growing 14.5%, EBIT growing 7.7% and EPS growing 8.2%.

• What disappointed investors was FY22 guidance, which reflects a post-COVID drop in retail trading and continuing low interest rates.

• We believe FY22 will see a revenue decline of 7%, followed by a strong recovery. We believe shares are trading at 30.5x trough EPS.

• With shares at 1,481p, we expect a total return of 72% (18.0% annualized) by the end of 2024. The Dividend Yield is 2.6%+. Buy.

Introduction

We review our Hargreaves Lansdown (referred here as "HL") investment case after FY21 results were released on Monday (August 9). The results disappointed investors, and HL stock ended the day down 11.3%.

We initiated a Buy rating on HL in June 2019, after shares fell 16% following the suspension of redemptions by Woodford Investment Mana…