Jefferies hikes Pensionbee target, expects rally to continue

(Sharecast News) - Jefferies has hiked its target price for Pensionbee by more than 60% after first-quarter results came in ahead of expectations, saying the pension provider has a large market opportunity to expand in the US. The broker lifted its target for the shares from 107p to 172 and kept a 'buy' rating on the stock.

Assets under administration (AUA) came in ahead of forecasts in the first quarter, both on flows and market movement. "Costs were below our expectations too: marketing, money management and staff costs were all lower than we expected. Both higher AUA and lower costs have positive effects on our earnings forecasts," Jefferies said.

The broker now expects Pensionbee to swing into the black this year, forecasting a adjusted EBITDA of £0.4m, compared with previous projections of a £3.4m loss. What's more, Jefferies said its forecasts "remain quite conservative".

"Perhaps the biggest upside scenario is fast progress in the USA though. Pension funds there have assets of c.$27tn, or c.15x the size of the UK market [...] With support from their US-based partner, we expect little marketing cost drag from the expansion in America, and therefore a positive contribution should come quite soon," the broker said.

However, without detailed guidance and goals from the company, Jefferies has not made specific assumptions for the US business yet.

Pensionbee shares were down 0.6% at 137.12p on Friday morning, having surged by 25% over the past month and 47% since the start of the year.