The HUB24 Ltd (ASX: HUB) share price has slumped 4.04% as of lunchtime trading today. At the time of writing, the share price is changing hands at $105.15.
But for the year, the stock is making impressive gains, up 104% over the past 12 months.
For context, the S&P/ASX 200 Index (ASX: XJO) is up just 0.25% today, and 11.51% over the year.
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Investors are spooked
The company posted a strong FY25 result yesterday morning. Its underlying EBITDA is 38% higher (although below market consensus forecasts), and statutory NPAT surged 68% year on year. The board declared a fully franked final dividend of 32 cents per share, bringing the full-year payout to 56 cents, up 47% on FY24.
But brokers are concerned that the stock is overvalued.
In a note to investors this morning, Macquarie Group Ltd (ASX: MQG) confirmed its neutral stance on the stock and raised its 12-month target price to $103.30, up from $95.90 last month.
But despite the increase, the new target price still represents a potential 1.14% downside for investors at the time of writing.
"Valuation: Target Price moves ~7.7% to $103.30 (from $95.90), our DCF captures the operating leverage over the medium and long-term," the broker said in its note.
"Neutral. Operating performance continues to translate into financial results. We forecast a 14% EPS CAGR over FY25-30."
Macquarie isn't the only broker to revise its expectations either. Yesterday, UBS downgraded Hub24 to neutral and raised its price target to $112.00 from $105.00. UBS said it had valuation concerns despite a positive long-term outlook.
What else did Macquarie have to say about HUB24?
In the note, Macquarie explained that HUB24 delivered continued momentum across its key operating metrics – +13% active advisers, and +16% funds under advice (FUA) per adviser.
The growth in adviser numbers has seen HUB24 penetrate 33% of total Australian advisers, with another 44% of advisers covered by HUB24 distribution agreements but who are not using the platform.
"In addition to the potential increase in adviser penetration, the average FUA per adviser at $22m compares to industry average FUA of $76m per adviser. Assuming 2.5 platforms per adviser, would imply ~$30m FUA per adviser on a per platform basis or ~40% upside from current levels. Operating performance translated into Platform segment FUA +34%, supported by markets and record net inflows $19.8bn (+25% yoy)," the broker said.
Macquarie has revised its estimated earnings changes for the company. It has lowered the earnings per share (EPS) expectation by -0.8% for FY26, -3.8% for FY27, and -3.6% for FY28.
