RBC Capital upgraded Rathbones Group PLC (LON: RAT) to Outperform from Sector Perform in a note on Wednesday.
The bank highlighted the firm’s strong growth potential as it nears full integration with Investec Wealth.
RBC Capital also raised its price target for the stock to 2,000p from 1,850p a share.
“As full integration of Investec Wealth nears, and the financial benefits of the deal fully accrue, RAT is a full-service wealth manager operating at scale,” RBC Capital analysts said.
They noted that the recent arrival of new management presents “an opportunity for further strategic progression, to ensure the enlarged franchise achieves its organic growth potential.”
RBC Capital highlighted Rathbones' undervalued stock, stating it is “trading at a material discount to peers (despite stronger near-term growth).”
Furthermore, the firm expects Rathbones to deliver sector-leading capital returns, forecasting 21% of market capitalisation to be returned to shareholders over FY25-27E.
“We see a compelling value opportunity and upgrade to Outperform,” RBC Capital stated.
Despite the positives, which saw the company’s shares rise around 2% to 1,588p on Wednesday, the stock has declined 2.5% so far on Thursday, trading around the 1,548p a share mark.
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