TAM: FY26: Profit beat, EPS upgrades and yield attraction

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TAM: FY26: Profit beat, EPS upgrades and yield attraction

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Our upside case of 1,225p incorporates 10% higher free cash TAM compared to peers that employ retail client facing

flow over our forecast period, on market returns at greater investment professionals and advisers. Secondly, the low

levels than our base case and a more favourable environment relative price point for its service relative to collective funds

for asset gathering for WMs as structural growth drivers in the means it could yet act as a catalyst for further adviser take-

industry take hold. We apply a long-term growth rate of 3.5% up in MPS.

and a slightly lower WACC/discount rate of 7.5%. • We expect double-digit organic growth to continue across

our forecast period, driving 11% FY26-29E CAGRs for both

Downside scenario revenues and EPS.

The most likely downside scenario arises from market • Valuation. We believe TAM’s undemanding valuation of 15x

performance falling short of our expectations, as well as an CY26E earnings overlooks the group’s sector-leading organic

outlook for a prolonged period of lower-than-expected net growth prospects, high operating margins and attractive

flows. Our downside case of 425p incorporates 10% lower free financial return profile afforded by the lean operating

cash flow over our forecast period, and we apply a long-term model.

growth rate of 0% and a higher WACC/discount rate of 12%.

Risks to rating and price target

• Market and macro: Profitability is geared to the level of

markets (for both equity and fixed income securities). Macro

factors (most notably interest rates) have the potential to

impact willingness of clients to invest, with implications for

AUM levels and by extension revenues and profits.

• Regulation: The UK financial services market is tightly