Abrdn stock has continued to surge since rejoining the FTSE 100. A policy of rewarding shareholders has certainly helped, but there’s no getting away from the fact that last year was tough on the wealth manager. Profits swung to losses and outflows continued to mount. A partnership with Virgin Money to offer investment services to the bank could help drive revenues, as could the acquisition of Interactive Investor.
The Abrdn [ABDN.L] share price had been on a bull run since its promotion back to London's leading index. Over the past six months the stock is up over 51%, although since the start of the year the gains translate to a more modest 6.6%. Having hit a 52-week high of 237p on 7 March, Abrdn’s share price has dropped, to close Thursday 6 April at 201.7p.
So, has the bull run come to a head, or is there further upside in Abrdn shares?
Partnering with Virgin Money
Abrdn has joined forces with Virgin Money [VMUK.L] to launch an investment platform. Virgin Money customers will be able to open a stocks and shares ISA, or invest in a non-ISA product with a minimum investment of £25. The service offers three funds depending on how much risk an investor wants to take, with each fund taking ESG considerations into account.
“The service has been developed by Virgin Money in partnership with Abrdn, bringing together Virgin Money’s brand and distribution strength with Abrdn’s expertise in investments,” Virgin Money said in a statement.
The bank added that “growth in investments is a key strategic ambition” with the new digital platform an essential part of that strategy.
Abrdn will be hoping that this partnership will bring in more clients. The wealth manager has endured several years of client outflows, with 2022 being a particularly tough year. Assets under management dropped to £500m last year, a 7.8% year-on-year decline. Net outflows rose to £10.3bn, up from £3.2bn the previous year, as volatile markets led to investors pulling funds. Overall, Abrdn swung into a pre-tax loss of £651m for 2022, having made a £1.1bn profit a year earlier.
Despite a rocky 2022, Abrdn did manage progress in its wealth and savings business after its £1.5bn ($1.9bn) acquisition of the Interactive Investor platform. Interactive Investor net revenue rose 38% to £176m last year, with profits doubling to £94m.
Where next for Abrdn share price?
Abrdn’s share price may be on bull run at the moment, but the company has a long way to go before it is out of the woods. The company admitted that last year was “one of the hardest investing years in living memory” and cautioned that the outlook for global markets remains uncertain. The partnership with Virgin Money is promising, but shareholders will want to see the wealth manager edging towards a reduction in outflows.
For income seekers, Abrdn shares offer a dividend yield of just over 7%. Last year the board paid out a total of 14.6p in dividends per share. The stock has an arguably cheap 7.79 price-to-earnings ratio
But is there more upside in Abrdn’s share price?
Abrdn’s share price has a median 12-month target of 190p. Hitting this would see a 5.8% downside on Thursday’s close. At the start of April, brokers at Barclays [BCS] raised their price target on Abrdn’s shares to 185p from 170p. Despite the rise, this would see an even steeper downside on Thursday’s close.