Source: Sharecast
Canaccord said Jupiter's earnings outlook was poor, in its view, which it said was "not remarkable" in the UK traditional asset managers sector in itself, noting that it now expects underlying earnings per share to decline by 55% year-on-year in FY25 and 11% year-on-year in FY26.
The Canadian bank said its forecasts were predicated on -£4.0bn net outflows in FY25, followed by -£0.7bn net outflows in FY26 before turning to net inflows of £3.3bn in FY27. But it also said it sees downside risk to its net flow forecasts.
"Against the steep earnings decline, the capital returns policy does not provide a compelling offset, in our view," said Canaccord Genuity. "The ordinary dividend policy is 50% of pre-performance fee underlying earnings, which introduces significant volatility into the expected dividend return."
Canaccord, which lowered its target price on the stock from 78.0p to 60.0p, also doesn't expect to see further buybacks or special dividends through its forecast horizon.
"Assuming no multiple re-rating or de-rating, we forecast an average annual return for FY24A-26F of -29% p.a., which clearly looks unappealing," said the analysts.
Shore Capital has upgraded its stance on Boohoo from 'sell' to 'hold' following a big slump in the fast fashion retailer's share price over recent months.
The broker said that, despite the market backdrop being poor – consumer confidence is still low, inflation is having an impact on spending and concerns remain about the fallout from America's trade war – downside is now limited after a 35% drop in the stock since November.
"While we believe that the group could face challenges from a tough macro backdrop, the focus on the Debenhams model could yet provide a more sustainable solution, for which further details are expected during the full-year results," Shore Capital said.
Boohoo said last month that it is to push ahead with plans to rebrand as Debenhams despite opposition from its largest shareholder Frasers Group – a move which Shore Capital said is "sensible".
"By focusing more on a marketplace model, it provides an opportunity for better profitability (management guides to a 20% EBITDA margin for the Debenhams division over the medium-term vs 6-8% margin for Youth brands and double-digit for Karen Millen)," the broker said. "However, the profile of this profit development remains uncertain, and there remains a negative mix impact from other brands; therefore, we retain some caution while restructuring occurs."
