St Jamess Place PLC (LON:STJ) shares were hit by a downgrade from Deutsche Bank on Monday, even though the wealth manager is seen as “the leading company in a growth industry”.
Deutsche, which had upgraded its recommendation on the FTSE 100 company to buy in October, reversed this back to a hold rating in a note to clients as the balance of risk and reward was seen to be reflected in the recent share price.
READ: St James Place's funds under management rise to new record[hhmc]
In fact, the German bank nudged up its target price to 1,220p from 1,190p.
Analysts said they believe that over the next five years, SJP “can deliver circa twice the market growth rate, thanks to strong adviser growth and controlled outflows”.
Growth in gross flows is forecast to recover from a 4% decline in 2019 to 17% in 2020 as the analysts predict an easing in last years uncertainty and flipping round to a near-term “Brexit bounce”.
Having said this, it was acknowledged that the group faces “two key questions”, namely whether changes to its charging structure might lead to lower group margins, and whether growth can reach the targeted rate of around 15% per year while maintaining the 80% dividend payout ratio.
Better value was seen by the analysts at M&G PLC (LON:MNG), where after being spun out of Prudential, the UK fund management group is trading on a “remarkably low” rating, with a dividend yield over the next 18 months of 14% if last years final dividend is added to the prospective payout from 2020.
Expecting a re-rating driven by an “easing of the current post-demerger flow back”, Deutsche has M&G on a buy rating.
The same rating is also applied to Direct Line Insurance Group PLC (Read More – Source
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