Hargreaves Lansdown: Changes Coming, But Not Clearly Enough
(Preview) Company Update (HL LN) (Neutral)
Summary
Changes may be coming after HL's co-founder and biggest shareholder called for change. Shares are down 64% since 2019.
HL has good qualities like large recurring revenues and platform characteristics, but has had mixed results in recent years.
Asset growth has been solid, but mix shift is negative. Revenue growth should continue over time, but costs are growing too fast.
A new CEO will start in 2023, but it is unclear what he will change. Three long-time shareholders have 40% of the shares.
At 879.12p, HL shares have a 17.5x P/E and a 4.5% Dividend Yield. We prefer to wait until clear evidence of self help. Avoid for now.
Introduction
We review Hargreaves Lansdown ("HL"), the U.K.’s largest platform for retail investors, after co-founder and 20% shareholder Peter Hargreaves publicly criticised the company’s current strategy and called for “huge” cost cuts in an interview with the Financial Times over the weekend.
HL can be a potential turnaround. Its business has positive qualities, i…