Netwealth has announced it will absorb the impact of the cut to the official cash rate, equivalent to a cut of around -10%to pre-tax profit on a full-year basis. This is in line with UBS forecasts.
Hence, revised FY20 guidance is only marginally below the broker’s estimates. The broker now believes Netwealth offers greater revenue resilience versus other wealth managers.
However, there is limited value appeal at present and a Neutral rating and $6.50 target are maintained.
Sector: Diversified Financials.
Target price is $6.50.Current Price is $6.70. Difference: ($0.20) – (brackets indicate current price is over target). If NWL meets the UBS target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
