Morningstar initiates 'high' uncertainty rating on Hub24

Hub24

20/10/2022 05:18

** Brokerage Morningstar says it expects Australian data
solution co Hub24  HUB.AX  to keep growing, but competition
among platforms will likely be more even from here on
    ** Morningstar initiates coverage with 'high' uncertainty
rating and A$20.50 fair value estimate    
    ** Says co operates in a commoditised industry where 
software functionality tends to be replicated and regulatory
framework perennially advocates lower fees for consumers
    ** Says co's efforts to build switching costs via
cross-selling or creating an integrated offering are not likely
to be successful longer-term
    ** Forecasts HUB's underlying NPAT growth averaging 19% per
year
    ** Forecasts co's underlying EBITDA margin average 39% per
year over next five years
    ** Brokerage assumes co will capture 10% of the platform
market by fiscal 2027, from 5% currently
    ** Expects both administration fee and platform cash margins
to compress over time due to competitive pressures
    ** 8 of 11 analysts rate the stock "buy" or higher, 3 "hold"
and none "sell" or lower; their median PT is A$32.50 – Refinitiv
data
    ** Stock has fallen 10.2% this year, as of last close     
 (Reporting by Echha Jain in Bengaluru)
 ((Echha.jain@thomsonreuters.com))