UBS has moved St. James's Place Plc (SJP) to a 'buy' recommendation, up from 'neutral', while reducing its 12-month price target to 1,465p from 1,565p - a 6% cut intended to reflect heightened risks the bank attributes to artificial intelligence-related disruption.
The brokerage noted the shares closed at 1,271p on Feb. 19, and that the stock has fallen 13% year-to-date and 14% over the previous month. UBS said recent weakness partially reflects read-through from the launch of an AI-powered tax planning tool in the United States.
Underlying UBS's upgrade is a revised base case that assumes net flows decline to zero by 2032, a change that reduces the valuation to the new 1,465p target. On a multiples basis, UBS calculates St. James's Place is trading at 12.5x its 2027 underlying cash earnings estimate, which it says sits below the 13-15x range applied to peers.
The broker is forecasting what it describes as double-digit medium-term earnings growth, driven by a combination of a fee change implemented in August 2025 and the progressive runoff of
UBS highlighted that a drag on margins today comes from
UBS's modelling points to underlying cash results more than doubling from
Key financial forecasts and assumptions
- UBS forecasts underlying cash results rising from
UBS sets out five sensitivity scenarios to capture AI-related risks and other pressures. Its new base case - the primary reference in the broker's view - assumes net flows lapse to zero by 2032 and corresponds to a valuation of 1,465p. A stress test in which gross flows fall to zero by 2032 produces an implied valuation of 1,170p, or about 20% below the base case. An accelerated stress - no gross flows from 2027 - reduces the implied value to 585p, or a 60% decline versus the base.
Other scenarios focus on fee and cost dynamics. A fee pressure case, assuming cumulative margin compression of 1 basis point per year to 37 basis points by 2032, lowers the valuation to 1,035p, roughly 30% below the base case. Conversely, an expense benefit scenario in which controllable costs are cut by 20% to to 300 million in 2032 - implies upside to 1,560p, or about 6% above UBS's base case.
Flows, earnings and AUM projections
UBS has built AI-related disruption into its forecasts by reducing gross flow assumptions. It projects gross inflows of
Specifically, UBS expects gross inflows of
Net inflows are forecast to fall from to 2 billion in 2030, and to nil by 2032.
Assets under management are modelled to increase from
UBS's financial projections include:
- Underlying cash results of
- IFRS earnings per share of 88.9p in 2025, 90.7p in 2026 and 115.1p in 2027, progressing to 292.2p by 2032.
Provision, buyback and liquidity picture
UBS expects the company to announce a
The brokerage's analysis of the client redress provision shows it was initially set at about which UBS estimates comprised and the company had released at 1H25, leaving
UBS expects an increase in the company's payout ratio to 70% from 2027, up from a current level of 50%. The broker also calculates limited excess liquidity of around 60 million at 1H25 after accounting for listed items including 2.2 billion in liquid assets, a 320 million client redress provision, 128 million in dividends and buybacks, 582 million in deferred tax liabilities and a 576 million management solvency buffer.
Finally, UBS flagged roughly 5.7 billion of third-party cash balances held with Flagstone that do not currently earn a margin. Management has indicated plans to explore options for a cash proposition during 2026, with a potential introduction in 2027.
Bottom line
UBS's upgrade to 'buy' is driven by a combination of projected earnings growth, a relatively undemanding valuation versus peers and a set of scenarios that quantify AI-related risks. The bank has trimmed its price target to reflect those risks while still viewing the stock as attractive at current multiples under its revised base case.