Is the Hub24 (ASX:HUB) share price a buy?

Should investors be looking at Hub24 right now?

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Could the Hub24 Ltd (ASX: HUB) share price be one to look at after its latest quarterly update?

Hub24 has a few different parts to its business. It has its Hub24 platform, the HUBconnect business and Xplore platform. The business offers advisers and their clients a comprehensive range of investment options, with managed portfolio solutions and enhanced transaction and reporting functionality.

June 2021 quarterly update

For the three months to 30 June 2021, Hub24 announced record platform quarterly net inflows of $3.9 billion. That comprises $2.2 billion from Hub24 platform, $1.4 billion from the completion from the completion of the ClearView Wealth bulk transition and $0.3 billion from Xplore Wealth.

It also had record platform annual net inflows of $8.9 billion – an increase of 80% year on year.

Total funds under administration (FUA) is now $58.6 billion, including Xplore, with platform FUA of $41.4 billion as at 30 June 2021 (up 141% year on year). The portfolio, administration and reporting services (PARS) FUA was $17.2 billion.

During the quarter, the private label investment and superannuation offer for IOOF Holdings Limited (ASX: IFL) was launched and the Hub24 and IOOF teams are continuing to work together to roll out the solution across the IOOF adviser network. The bulk transition of $1.4 billion from Clearview was also completed during the quarter, management said this demonstrated the teams' ability to deliver record organic growth whilst also managing large scale projects.

The company said that given Hub24's significant growth in FY21, the expansion of our product and service offerings and the opportunities available in the market, it is investing to support future growth. The company is going to expand its executive team, hire additional distribution team members and invest in technology infrastructure to support scale and ongoing innovation.

According to the latest available 'Strategic Insights' data for the Australian platform market, Hub24's market share has increased to 3.9% from 2.5% at 31 March 2021 and now includes the Xplore platform FUA.

Broker opinion on the Hub24 share price

Credit Suisse is one of the first brokers to react to Hub24's update. The broker noted that the FUA rise, helped by strong inflows, was stronger than it had been expecting.

Another thing that the broker noted was that it has grown its market share of advisers from 9% to 15% over FY21. As a result, FUA may be able to reach a higher number than originally thought.

Credit Suisse has a price target of $31 on Hub24 for the next 12 months and rates it a buy. That suggests the Hub24 share price could increase by more than 20% in the next year, if the broker is right.

On the broker's numbers, Hub24 is valued at 58x FY22's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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