RBC Capital starts Liontrust at 'underperform', Polar Capital at 'outperform'
RBC Capital Markets initiated coverage of on Friday with an 'underperform' rating and 390p price target as it took a look at the UK asset management sector.
"Our cautious outlook for LIO relates primarily to a protracted recovery in flows versus peers," it said. "This reflects weak absolute and relative performance in its key strategies."
Subsequently, RBC said its adjusted pre-tax profit forecasts are 0%/-4%/-5% below consensus over FY25-27.
"In addition, a further delay in flows recovery may necessitate a cut to dividend per share.
"Given these challenges, we see limited scope for its price-to-earnings valuation discount versus the peer group to close in the near-term, and we therefore initiate at underperform."
The bank also initiated coverage of Polar Capital Holdings, with an 'outperform' rating and 600p price target, calling it "a premium proposition".
"POLR is set for a return to net inflows, which should underpin above sector average growth, and also provides a catalyst for the shares to re-rate," RBC said.
"We anticipate enhanced client demand for its differentiated and well-performing investment propositions amid an improving UK retail environment through 2025."
The bank's adjusted pre-tax profits forecasts are 4%/5%/6% ahead of consensus for FY25-27, with its dividend per share growth rate also higher.
"The current 12-month forward P/E of 9.5x is a 21% discount to its historical average representing an attractive entry point," it said.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.