HUB delivered a Q1 FY24 trading update on Tuesday, which was initially greeted with enthusiasm, sending the stock to a fresh all-time high before most of the gains were surrendered as sellers surfaced into the strength:
- Total Funds under Administration (FUA) rose from $68.35bn to $82.72bn, up +21% year on year.
- 1Q Net Inflows were $2.8bn, down 6.3% year on year, with growth getting a touch harder.
However, while these numbers are positive, the question of valuation resurfaces, especially after the stocks doubled over the last year, the stocks trading on an Est. 40x FY24 earnings, a demanding multiple if/when growth becomes harder to maintain. This update showed a slowing rate of funds flowing onto HUB’s platform through the quarter, and while HUB continues to eat into its competitor’s market share, this will become increasingly difficult i.e. HUB’s market share is now 6.3%, up from a previously reported 5.4%. A clear positive in their update was the number of advisers on the platform, which rose +10.6% to break above 4000.
- We are now neutral on HUB on valuation grounds; this is an excellent company, but we believe it’s rich ~$35.
The move by HUB (and REA covered below) illustrates that a number of this year’s top performers are becoming fully valued in today’s environment of the “strong getting stronger and vice versa”, and while all moves will be evaluated on a case by case basis we are planning/hoping to sell or reduce some of our holdings into strength, and perhaps venture back into the bargain hunting arena.
MM is now neutral toward HUB
Add To Hit List
