We apply a DCF analysis, utilising a 10% mid-term growth rate and a 4.0% terminal growth rate to derive our target price of 410p. This is equivalent to 17x our FY 2027 EPS estimate.

Higher volume and activity growth is the biggest upside risk, in our view, if markets remain strong and AJ Bell continues to take significant market share. Further, cash margins and volumes may hold up better than we expect, which would present another key upside risk.