Berenberg downgrades Ashmore, sees better value elsewhere
By Michele Maatouk
Date: Wednesday 16 Jan 2019
(Sharecast News) - Berenberg downgraded Ashmore to 'hold' from 'buy' on Wednesday, trimming the price target to 413p from 425p as it sees "significantly" more upside elsewhere in the sector.
The bank noted that Ashmore was the best-performing asset manager in its coverage last year, slipping 10% as peers fell 40% on average. It argued that this was justified by the group's resilient inflows.
Ashmore now trades at a 45% price-to-earnings premium to peers, which Berenberg fears leaves it exposed, especially to a moderation in the group's flow momentum.
Ashmore ended 2018 with $76.7bn of assets under management, in line with expectations. Berenberg said that while it's likely to be the only asset manager in its coverage to report positive flows in the fourth quarter, inflows of $0.5bn were a little lower than the $1bn pencilled in by analysts.
Berenberg said the three-year relative performance of Ashmore's funds remains strong but the near-term performance has weakened.
"Our analysis finds relative performance to be a strong lead indicator of Ashmore's gross sales. We lower our FY 2019E flow expectations to reflect this insight, causing us to move below consensus," it said, as it downgraded its estimate for inflows to $4.4bn versus $4.9bn consensus.
At 1255 GMT, the shares were down 2.2% to 363.60p.
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