Brokerages flag margin pressure for Australia's Netwealth in FY26

Jefferies sees FY26 EBITDA margins to be flat or slightly down over FY25 for Australia's Netwealth Group NWL.AX

Financial services co reports FY NPAT of A$116.5 mln ($74.79 mln) on Thursday

Jefferies increases PT to A$32.5 from A$32.1

Operating leverage continues to support margin expansion, which is well reflected in consensus estimates - Jefferies

Meanwhile, Morningstar expects revenue margin compression for co due to competitive pressures, fee caps and higher operating costs

Both note that co's better-than-expected FY25 results are owed to non-core income and one-offs rather than core business, with Morningstar saying that current EBITDA margins of 50% are lower than the 52% in 2020

Morningstar views shares as materially overvalued, adding that market assumes higher than likely growth in flows and margins

($1 = 1.5576 Australian dollars)