Is HUB24 (ASX:HUB) A Buy, Hold, Or Wait? Decoding The Growth Story And Valuation Challenges

The wealth management technology sector has been a hotbed of innovation in recent years, and HUB24 (ASX:HUB) has emerged as a key player. With its H1 FY25 results revealing 25% revenue growth and a soaring stock price, investors are asking: Is this a stock to buy now, or does its elevated valuation justify caution? Let’s dissect the data.

The Growth Engine: Revenue, FUA, And Market Share

HUB24’s financial performance in H1 FY25 underscored its momentum. Revenue hit AUD195.2 million, up 25% YoY, driven by a 36% surge in Funds Under Administration (FUA) to AUD98.9 billion. The Platform segment, which fuels 80% of revenue, continues to dominate, while Tech Solutions—its newer arm—hints at diversification potential. Over the past five years, revenue has grown at a 27.4% CAGR, and net profit margins nearly doubled to 14.4% in FY24.

The real star, however, is FUA. HUB24’s FUA has skyrocketed from AUD26.6 billion in H1 2021 to AUD98.9 billion in H1 2025—a 53% CAGR. This growth reflects its expanding advisor market share, which jumped from 11% in 2021 to 31% in 2025. The company now holds 7.9% of Australia’s wealth management market, positioning it as the top gainer among the top 10 platforms.

Industry Tailwinds And Untapped Potential

The Australian wealth management sector is booming, and HUB24 is capitalizing. Its partnerships now cover 77% of advisors, yet 46% of this group has not yet adopted its platform—a staggering growth opportunity. The average FUA per advisor has nearly doubled to AUD20 million, suggesting deeper client engagement.

Investments in R&D are ramping up, from AUD10 million in FY24 to an estimated AUD25 million in FY25, signaling a commitment to innovation. This could solidify its lead over competitors like Netwealth, which grew revenue at a slower 20.9% CAGR over the same period but maintains higher net margins (32.7% vs. HUB24’s 14.4%).

Valuation: A Double-Edged Sword

HUB24’s stock has surged 74% in the past year, hitting an all-time high of AUD92.65 before profit-taking pulled it back. As of April 2025, it trades at an eye-watering P/E of 80x and EV/EBIT of 44x—far above its historical averages and peers.

While bulls argue that high valuations reflect growth potential, bears note that Netwealth’s superior margins and HUB24’s recent 11% quarterly decline add risk. Analyst sentiment is mixed: 2 ‘Buy’, 11 ‘Hold’, and 2 ‘Sell’ ratings, with an average price target of AUD74.32 (5% upside from AUD70.89).

Risks And Considerations

• Valuation Concerns: ORD MINNETT’s downgrade to ‘Hold’ in April 2025 cited overvaluation, though a AUD79.70 average one-year target suggests lingering optimism.
• Competitive Pressures: Netwealth’s entrenched presence and higher profitability pose threats.
• Regulatory And Cybersecurity Risks: The financial sector faces increasing scrutiny and cyber threats, which could disrupt operations.
• Dividend Dependency: With a 0.81% yield and payout ratio of 0.66, dividends aren’t a core attraction.

The Bottom Line: A Watchlist Candidate, But Proceed With Caution

HUB24’s fundamentals are compelling: rapid FUA growth, strong market share gains, and a strategic R&D push. Its 5-year total shareholder return of 587% (including dividends) is a testament to its execution. However, the current valuation demands patience.

Investors should monitor two key metrics:
1. FUA Trajectory: HUB24’s target of AUD115-123 billion by June 2026 will be critical.
2. Margin Expansion: If net margins climb closer to Netwealth’s levels, the stock could justify its premium.

For now, HUB24 belongs on the watchlist. The stock’s high beta (volatility) and institutional buying (76 funds, 22.58% rise in owners over three months) suggest it’s a long-term growth story. However, with shares trading at historically elevated multiples, timing the entry is crucial. A pullback to the AUD60–AUD70 range—closer to its April lows—could present a better risk-reward opportunity.

In conclusion, HUB24’s growth is undeniable, but investors must weigh its potential against its rich valuation. For aggressive growth-oriented portfolios, it’s a buy on dips. For others, waiting for a correction—or pairing it with more value-oriented stocks—might be prudent. The wealth tech race is just heating up, and HUB24 is leading—but don’t overpay to join the rally.