AJ Bell PLC’s (LON:AJB) should be able to cope with potential headwinds in 2021, said analysts at Berenberg as they removed their ‘sell’ rating for the shares.

Momentum from both macro and structural drivers helped the company to beat expectations for 2020, with new clients signed up twice as fast as the previous year and full-year earnings per share up 27%.

The analysts said they continue to believe that interest rate cuts from last year will create headwinds in the first half, however, they now view headwinds for the year to end-September 2021 “as manageable in the context of the group’s overall profitability”.

Markets continue to push equity values higher, with management’s new guidance on transaction levels and margins was struck prior to November’s vaccine rally.

That said, the analysts forecast slower new customer growth and lower transactional revenue for the current year, leading to flat EPS, with a return to earnings growth in the 2022 and 2023 financial years, “driven by inherent operating leverage and long-term structural growth drivers”.

However, with shares currently trading on circa 50 times calendar-2021 earnings, the analysts view the company as “perfectly priced” and so upgrade to a ‘hold’ recommendation.

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