NWL is up over +28% so far in 2024, a very impressive advance for one of the fastest-growing wealth management businesses in Australia – NWL operates the largest of the speciality platform providers in Australia. However, neither MM nor the market was keen on NWL’s March Quarter update, which, despite strong Funds Under Administration (FUA) growth, saw the stock sell-off aggressively due to fears about their underlying metrics, such as margins and associated leverage.
NWL is trading on Est 56x earnings for 2024, which suggests a lot of growth is already built into the price, leaving plenty of room for further disappointment. We are concerned that both revenue growth and operational leverage will be harder to come by than the market expects, which will see this elevated valuation fall.
- We can see NWL trading back towards $18 in 2024, or around 8% lower.
MM is bearish NWL around $20
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