On Monday, Deutsche Bank adjusted its outlook on Ashmore Group (ASHM:LN) (OTC: AJMPF), reducing the price target to GBP1.70 from the previous GBP1.80. The firm has decided to maintain a Hold rating on the stock. The revision follows the report of Ashmore Group's assets under management (AuM) being 3% lower than anticipated by both the bank and the consensus.
The financial institution pointed out that Ashmore experienced net outflows of $2 billion, which was more significant than the expected outflows of $1 billion to $0.7 billion. The composition of Ashmore's AuM also did not meet expectations, with only the overlay segment, which typically generates very low revenue margins, performing better than anticipated.
All other segments with higher margins, especially Blended Debt, were reported to be in line or weaker than the market had predicted.
Deutsche Bank highlighted that the investment performance of Ashmore Group in June showed a slight decline. This detail contributes to the rationale behind the revised price target, as investment performance is a critical factor for asset management firms in attracting and retaining investors.
The Hold rating indicates that Deutsche Bank advises investors to maintain their current position on Ashmore Group shares, without suggesting an increase or decrease in their holdings. The new price target of GBP1.70 is now the bank's expectation for the stock's potential price level in the future, based on the latest financial data and market conditions.
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