Integrafin bounces on brighter prospects

All hail the Fed pivot. Federal Reserve chairman Jay Powell’s comment that the US central bank was likely “at or near its peak” of interest rate tightening caused a bounce in shares across equity markets as Integrafin (IHP) announced its full-year results, including those of investment platforms.

Prior to the rate hiking cycle, Integrafin was seen as a more resilient bet than competitors such as Hargreaves Lansdown (HL.) and AJ Bell (AJB), as its focus on financial advisers was considered to be less volatile than a focus on flighty retail investors.

It hasn’t quite worked out like that, though. Since the start of last year, Integrafin’s shares have halved in value. Interest rate tightening and cost of living pressures meant financial advisers have been battling to retain existing funds under management, let alone win new business.

Despite this, Integrafin put in what chief executive Alexander Scott described as a “solid” performance. A 2 per cent increase in the number of advisers registered on its Transact platform (to 7,683) and a 10 per cent rise in funds under direction to £55bn had already been trailed to the market, but a flat underlying pre-tax profit figure of £63mn comfortably beat consensus forecasts.

This, together with the more positive macroeconomic outlook following Powell’s comments, pushed Integrafin’s shares up by around 10 per cent. They are up 39 per cent since the end of October and now trade at just under 20 times Panmure Gordon’s upgraded earnings forecast of 14.5p a share for 2024, which the broker points out is higher than faster-growing AJ Bell, and “materially higher than others in the sector”. The bounce-back already looks priced in. Hold.

Last IC View: Hold, 271p, 26 May 2023