Berenberg cuts abrdn to ‘hold’, says core growth may remain slow

Berenberg downgraded abrdn on Wednesday to ‘hold’ from ‘buy’ and cut the price target to 260p from 285p.

  • Abrdn
  • 28 March 2024 17:21:42
Abrdn

Source: Sharecast

The bank said abrdn shares have disappointed in recent years, underperforming the UK index by 50% since December 2017 and 27% since December 2020.

The recent acquisition of Interactive Investor(ii) is supportive of long-term growth and Berenberg reckons the rationale for cross-selling investment advice is sound. "However, we expect investors to remain sceptical about the growth outlook for the core investment management business," it said.

Berenberg said that if abrdn used the £1.5bn paid for ii to buy back shares, it would be 40% EPS accretive.

"Without meaningful buybacks, investors may question whether the core business can deliver long-term growth. This could be funded with further sales of the Indian stakes (now worth £1.2bn), but we expect bolt-on acquisitions may be prioritised," it said.

Berenberg also argued that abrdn is underexposed to exchange-traded funds (ETFs). "Large-scale asset managers should embrace growth in passive investing, in our view," it said. "Amundi’s low-cost model is ideally suited to this business, and the acquisition of Lyxor brings meaningful scale. Scale is key, but abrdn is underexposed."

Exchange: London Stock Exchange
Sell:
0.00
Buy:
0.00
Change: 20.64 ( 0.26 %)
Date:
Prices delayed by at least 15 minutes

Compare our accounts

Whether you're looking for a Share Dealing Account or Share Dealing ISA, we've got an account to suit your needs.

Lloyds Bank is not responsible for the content and accuracy of the Markets News articles. We may not share the views of the author. Understand the risks, please remember the value of your investment can go down as well as up and you may not get back the full amount you invest. We don't provide advice so if you are in any doubt about buying and selling shares or making your own investment decisions we recommend you seek advice from a suitably qualified Financial Advisor. Past performance is not a guide to future performance.

Important legal information

The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

Logo Allfunds

The information contained within this website is provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd unless otherwise stated. The information is not intended to be advice or a recommendation to buy, sell or hold any of the shares, companies or investment vehicles mentioned, nor is it information meant to be a research recommendation. This is a solution powered by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd incorporating their prices, data news, charts, fundamentals and investor tools on this site. Terms and conditions apply. Prices and trades are provided by Allfunds Digital, S.L.U. acting through its business division Digital Look Ltd and are delayed by at least 15 minutes.

FE fundinfo Logo

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

Refinitiv Logo

© 2024 Refinitiv, an LSEG business. All rights reserved.