UBS upgrades Ashmore to 'buy', shares surge
surged on Friday after UBS upgraded shares of the emerging markets investment manager to 'buy' from 'neutral' and lifted the price target 180p from 175p, as it said flow momentum, investor rotations and an attractive valuation lead to a favourable risk-reward.
UBS said it expects improving inflows for the firm given the recent rotation out of US capital markets and the weaker US dollar, which should lead to higher allocations to EM debt and equity strategies.
UBS noted that Ashmore has had more than five consecutive years of outflows but said the flow picture has improved considerably in 2024 with the recent improvement coming despite the stronger US dollar following the US presidential elections.
"As investors reduce their US overweights, we expect institutional investor allocations to EM debt and EM strategies to increase after hitting multi-decade lows last year," it said.
The bank lifted its 2026/27E EPS estimates by 2%/6% to reflect a more optimistic flow outlook, offset by the recent impact of the weaker US dollar.
"This puts us 9-12% above consensus for 2025-27E EPS," it said. "We think the risk-reward for the stock now skews favourably to the upside."
At 1035 GMT, the shares were up 7.5%
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