Bank of America starts coverage of Rathbones at 'buy'
Bank of America initiated coverage of wealth manager Rathbones Group on Wednesday with a 'buy' rating and 2,250p price target, as it said the stock remains highly undervalued on around 10x 2026 estimated price-to-earnings.
It noted that this is a 19% discount to the five-year average.
"We think the current valuation does not price in the transformational acquisition of IW&I, which has driven FUMA +67% and formed one of the largest UK wealth managers," the bank said.
"The migration of IW&I is due to complete in H125, followed by a net flow recovery and realisation of most synergies in H225E."
Bank of America said this should drive operating margin expansion to 28.4% in 2026E, versus consensus of 27.7%.
"We further expect wealth and asset management net flows to be supported by equity market momentum, softening interest rates and reallocation from US to EU equities," it added.
At 1120 BST, the shares were up 5.9% at 1,760p.
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