Morgans believe that Hub24 is acquiring scale and some capability, after the company announced three acquisitions and the divestment of Paragem.
Net consideration will be around -$93m (including integration and transaction costs), to be funded primarily via additional capital raised (around $60m) and scrip (around $30m), details the broker.
Acquisitions include Xplore (around $60m), Ord Minnett PARS (around $10m) and an equity stake in Easton Investments (around $14m for up to an approximate 40% stake).
Management expects the transactions to be circa 13% EPS accretive in FY22.
Morgans continues to see the largest near-term earnings risk is the impact from lower rates (cash rate decline or cut to the margin achieved on cash).
The rating is increased to Add from Hold and the target price is increased to $22.40 from $18.10.
Sector: Diversified Financials.
Target price is $22.40.Current Price is $20.97. Difference: $1.43 – (brackets indicate current price is over target). If HUB meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
