On Friday, RBC Capital initiated coverage on Liontrust Asset Management (LON:LIO:LN) stock with an Underperform rating and set a price target of GBP3.90. The firm's analysis suggests a cautious stance towards the company, citing a slower recovery in financial flows compared to its peers. The underperformance of Liontrust's key strategies was highlighted as a primary concern affecting future earnings potential.
The report from RBC Capital indicates that their adjusted profit before tax (PBT) forecasts for Liontrust are 0%, -4%, and -5% below the consensus for fiscal years 2025 to 2027. The analyst noted that the slower recovery in flows could potentially lead to a reduction in the company's dividend per share (DPS). This outlook reflects the ongoing challenges Liontrust faces in achieving performance metrics that align with industry standards.
Liontrust's current price-to-earnings (P/E) valuation discount compared to its peer group is not expected to narrow in the near future, according to RBC Capital's assessment. The firm's statement points to the necessity for Liontrust to address the issues that are impacting its financial flows and overall performance.
The analyst at RBC Capital also suggested that if the recovery in flows is delayed further, it could necessitate a revision of the company's dividend strategy. This could have implications for investor returns and the attractiveness of Liontrust stock in the market.
In summary, RBC Capital's initiation of coverage on Liontrust Asset Management reflects a guarded outlook, with the firm setting a price target of GBP3.90. The report emphasizes the need for Liontrust to improve its financial flows and performance relative to its peers to overcome the current challenges and valuation discount.
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