Hub24 Ltd (ASX: HUB) shares have been in focus this week after the investment platform provider held its investor day event.
Bell Potter has been busy running the rule over the update and has given its verdict on the ASX 200 stock.
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What did the broker say about this ASX 200 stock?
Bell Potter was pleased with what it heard at the event and highlights the upside risk to funds under administration (FUA) guidance from new initiatives. It said:
We attended the Investor Day, with the biggest take out being early upside risk to FUA guidance as the company continues to broaden its offering and uplift volumes. Mention of continued strong inflows, more advanced than expected and positive clarification for the trustee licence which runs distinct to its custodian. This has been a deliberate and flexible approach, with an embedded option to purchase the business.
On the negative side, the broker notes that the ASX 200 tech stock is expecting its expenses to grow more than originally expected in FY 2026. However, it points out that this is due to management's plan to outpace rivals, and its EBITDA margin is still expected to improve year on year. It adds:
Outlook for expense growth has been dialled up to +18-20% with the step change primarily in first half. This reflects a deliberate move to outpace peers and bring forward investment. We believe around half relates to variable cost. So, expect to see this mitigated by operational leverage.
Underlying EBITDA margins are still placed to improve YOY. Fixed costs are basically new solutions and revealed myhub, a recent one user login and app switcher with prompts. We got some efficiency metrics such as halving the time taken to produce advice documents vs. industry average. Like an ERP software but prototyping with co-production and beta testing FY26. Production FY27.
Should you invest?
According to the note, the broker has retained its buy rating on the ASX 200 stock with a trimmed price target of $125.00 (from $135.00).
Based on its current share price of $103.70, this implies potential upside of 20% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
Negative surprise in the expense guidance, but we left confident in the growth outlook and cadence over peers. More than mitigated from scale and entrenches customers in line with our initial thesis. Adviser efficiency has historically benefitted flows/valuation.
