St. James Place (LON: STJ) share price has crawled back in the past few days even as concerns about the company continued. After bottoming at 386p in April, the stock has rebounded to about 456p. Still, it is one of the worst-performing companies in the FTSE 100 index as it plunged by over 70% from its highest level in 2022.
Assets inflows have deterioratedSt. James Place, the biggest wealth manager in the UK, has been under intense pressure in the past two years amid concerns about its asset growth, regulatory risks, and revenue and profitability retreat.
The most recent update showed that the company’s business was still growing at a slower pace than it did before. Gross inflows in the first quarter came in at £3.97 billion after adding £4.17 billion in the same quarter in 2023.
Its net inflows stood at £0.71 billion, also much lower than £2.0 billion a year earlier. As a result, the total funds under management came in at £179.04 billion, an increase from £153 billion a year earlier.
These results mean that the company is not growing as it used to in the past few years. They also imply that its revenue and profits will remain under pressure for a while. The most recent results shows that the company posted pre-tax underlying cash results of £483 million in 2023, down from £485.5 million a year earlier.
At the same time, its loss after tax came in at £9.9 million, a big reversal after the company made a profit of £407.2 million in 2023. This performance came after the company slashed its fees to comply with FCA’s Consumer Duty rules.
The company has also faced other challenges. A key issue was customer complaints about whether they received ongoing servicing historically. As a result, it has had to spend more money issuing customer refunds, which has hurt its profitability. It has set in place over £400 million for this.
St. James Place’s stock performance has left it highly undervalued compared to where it was a few years ago. Its market cap has dropped to about £2.2 billion. This means that the company could become a buyout target by a private equity company or a bigger wealth manager.
Interest in UK companies has risen recently. Thoma Bravo has acquired Darktrace while International Paper has bought DS Smith. St. James Place would be a good target because of its cheap valuation, long track record, and the possibility of implementing a turnaround.
St. James Place share price forecast
Turning to the weekly chart, we see that the STJ stock price peaked at 1,556p in 2022 to a low of 356p in April. It formed a death cross pattern in August 2023 as the 50-week and 200-week moving average crossed each other.
St. James Place stock has tumbled below 511p, its lowest swing in March 2020. Therefore, the outlook for the stock is moderately bullish as buyers target the resistance at 511p. That is known as a break and retest pattern, which is a sign of bearish continuation. If it happens, there is a likelihood that it will retest this year’s low of 386p.
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