On Monday, RBC Capital adjusted its outlook on Schroders (LON:SDR) Plc, a London-listed asset management firm, by reducing its price target slightly from £3.80 to £3.75, while keeping a Sector Perform rating on the stock. This adjustment follows the company's first-quarter asset under management (AUM) figures, which fell short of RBC Capital's expectations by 4%. The miss was attributed to underperformance across all divisions of Schroders.
The report indicated that Schroders did not disclose specific details on quarterly net flows, a practice that aligns with the company's usual reporting methodology. The revision in the price target was prompted by the need to update RBC Capital's financial model to account for the AUM results from the first quarter of 2024.
As a result of the lower-than-anticipated AUM, RBC Capital has also revised its adjusted operating profit forecasts for Schroders. The projections for the fiscal years 2024 through 2026 have been decreased by 1% for each year. The new price target of 375 pence reflects these updated estimates.
In the analyst's own words, "SDR's 1Q24 AUM was 4% below our forecast, with all divisions contributing to the miss. As is normal for SDR, there were no details on quarterly net flows disclosed. Updating our model for 1Q24 AUM results in our adj. operating profit forecasts decreasing by 1% for each of FY24-26. Our PT decreases to 375p (from 380p)."
The change in price target by RBC Capital serves as an update to investors on the firm's valuation of Schroders based on the latest available financial data. The Sector Perform rating suggests that the analyst believes Schroders stock is expected to perform in line with the sector average.
InvestingPro Insights
As Schroders navigates through a challenging quarter, with asset under management figures falling short of expectations, it's crucial for investors to consider a broader set of financial metrics and analyst insights. According to InvestingPro data, Schroders Plc (SHNWF) has a market capitalization of $7.09 billion and a price-to-earnings (P/E) ratio of 14.55, which adjusts to a lower 10.59 when considering the last twelve months as of Q4 2023. This suggests a more favorable earnings perspective on an annual basis. The company's revenue for the same period stood at $3.81 billion, with a modest year-over-year growth of 0.62%, despite a slight quarterly decline.
InvestingPro Tips highlight that Schroders has demonstrated a commitment to shareholder returns, having raised its dividend for three consecutive years and maintaining dividend payments for 33 consecutive years. Additionally, despite analysts anticipating a sales decline in the current year, they predict the company will remain profitable, and it has indeed been profitable over the last twelve months. Trading near its 52-week low, Schroders presents an intriguing case for investors who value historical dividend reliability and potential value opportunities.
To delve deeper into the financial health and future prospects of Schroders, investors can access additional InvestingPro Tips by visiting the dedicated page for Schroders at https://www.investing.com/pro/SHNWF. For those looking to enhance their investment research with InvestingPro, be sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With several more tips available on InvestingPro, investors can gain a comprehensive understanding of the company's performance and make informed decisions.
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