The HUB24 Ltd (ASX: HUB) share price has been in fine form in 2024.
So much so, the investment platform provider's shares are up an impressive 68% since this time last year.
This compares very favourably to a 10.5% gain by the ASX 200 index over the same period.
Unsurprisingly, this outperformance leaves the HUB24 share price trading within a whisker of the record high it set at the end of last month.
But does this mean that its shares have now peaked or could there still be gains to come? Let's see what one leading broker is saying.
Where next for the HUB24 share price?
According to a note out of Bell Potter, its analysts believe that the company's shares can continue to rise from where they currently trade.
Last month, the broker retained its buy rating on HUB24's shares with an improved price target of $59.00 (from $53.20). Based on its current share price of $55.13, this implies potential upside of 7% for investors.
What did the broker say?
Bell Potter was pleased with the company's performance in FY 2024 and also with its guidance for the near term. It notes that management is guiding to strong funds under administration (FUA) growth through to FY 2026. The broker said:
FY26 FUA guidance of $115-123bn was introduced, implying an 18% CAGR at the midpoint that supersedes FY25 FUA guidance of $92-100bn. FUA increased to $87.1bn on 14 August 2024 (unaudited), consisting of $1.7bn net flows, a positive market movement of $0.7m and a lumpy $0.3m transition classified as retail. This marks a strong start to FY25. EQT is expected to contribute largely in 2Q24.
Another thing that caught the broker's eye was HUB24's positive margin outlook. It adds:
UEBITDA Margins to expand. HUB expects low-to-mid-teens cost growth, benefitting from scale and business automation. Platform UEBITDA margins increased to 42.7% in 2H24 before the impact of myprosperity. Average cash allocation exited at 7.0% and remains below the historical 8-10% range, with management guiding to normalisation in the last 6 weeks. Class is scheduled to benefit from a ~5% price increase effective 1 July 2024. Customers have incurred one reprice in the two years post-acquisition.
In light of the above, the broker remains very positive on HUB24 and is tipping it as a buy. It concludes:
We remain Buy rated. The outlook for net flows is extremely compelling, with positive momentum witnessed so far into 1Q25. HUB begins FY25 with new solutions added to the platform, front-end capabilities launched for national advice networks and a piloted HNW offer. Combined with data security, we see this increasing the value proposition and market share gain.
