L1 Group Shares Gain New Bull: Here’s What Drove The Call

L1 Group shares (ASX: L1G) gained a new bull today, as Canaccord initiated coverage with a Buy rating and a A$1.41 price target, giving holders a timely catalyst for the battered stock, lifting the price 4.59% on Monday and reigniting debate about whether the recent September selloff represents a genuine buying opportunity or a warning sign about the combined firm’s ability to sustain its post-merger momentum.

The L1 Group share price will begin the day at A$1.14, recovering ground after a bruising run through September that has seen the stock shed approximately 13.64% month-to-date. Despite Monday’s bounce, L1G remains well below its recent highs, and near-term technical resistance is seen clustering around A$1.18 to A$1.20, a level the stock will need to clear convincingly before broader market confidence is fully restored.

Zooming out, the 12-month picture remains compelling, with L1G still up approximately 56% over that period, reflecting the substantial re-rating the business has undergone since the combination of L1 Capital and Platinum Asset Management was completed in late 2025.

Reasons For The Bullish Coverage

L1 Group was formed through the merger of L1 Capital and Platinum Asset Management, with Platinum Asset Management Limited formally renamed L1 Group Limited and trading under the ASX ticker L1G following the transaction’s completion in October 2025. The deal brought together two well-regarded Australian investment management franchises, creating a diversified platform spanning long/short equities, global equities, and property strategies, with the combined entity carrying a market capitalisation of approximately A$2.8 billion to A$3.0 billion.

The company’s FY2026 full-year results, covering the first complete operational period post-consolidation, provided meaningful evidence that the merger thesis is playing out. Revenue reached A$963.1 million, while net income came in at A$540.5 million, translating to an earnings per share figure of A$0.064 that beat analyst consensus expectations of approximately A$0.055 by roughly 16%. Profit margins surged to 56.13%, with gross operating margins exceeding 80%, reflecting the high operating leverage inherent in a scaled funds management platform where incremental revenue flows through to the bottom line with relatively modest additional cost.

The EPS beat is particularly significant because it suggests merger synergies and performance fee generation are materialising ahead of what consensus models had anticipated. However, the top-line revenue figure did fall short of some more aggressive analyst projections by approximately 4.7%, a gap that will require monitoring as markets assess whether the shortfall reflects timing differences in fee recognition or a more structural challenge in growing funds under management in the current environment.

The key risk to the bull case is straightforward: if equity markets soften materially, funds under management will compress, performance fees will evaporate, and the revenue line will come under pressure. Legacy Platinum funds, which historically attracted strong followings but faced outflows in recent years before the merger, will also need to demonstrate stable or growing FUM to validate the deal’s strategic rationale. Technical moving average sell signals that registered in early September serve as a reminder that near-term momentum remains fragile and that the stock needs consistent evidence of net inflows to sustain a recovery toward the A$1.41 target.

L1G shares enter the second half of September with a credible new bull in its corner, a strong FY2026 earnings beat on the board, and a structurally sound merger thesis that appears to be generating the repeatable fee income Canaccord’s initiation highlights. Time will tell if the bull case comes to pass, but for now at least, holders will be happier to have another bullish analyst on side.