Hargreaves Lansdown: Investment Case Still On Track; 2.9% Dividend Yield (Preview)

Company Update (HL/ LN) (Buy)

Summary

• Hargreaves Lansdown shares have been volatile and have lost 8.9% since the trading update on May 13; the Dividend Yield is 2.9%.

• Operations are strong - revenues have continued to grow at double digits, while the asset base has risen by 28% in the last 10 months.

• However, it has benefited from COVID-related higher retail trading, and investors worry this will fade and also fear low interest rates.

• We believe any headwinds are temporary, and revenues will recover; there are also possible cost cuts and potential strategic interest.

• With shares at 1,614.5p, we expect an exit price of 2,489p and a total return of 67% (16.6% annualized) in less than 3 years. Buy.

Introduction

We review the investment case for Hargreaves Lansdown, the U.K.'s #1 platform for DIY investors. HL share price has been volatile in the last 12 months, falling 8.9% since its 10-month trading update on May 13:

HL Share Price (Last Year)

We believe the HL's investment case remains on track and continues to be supported…