On Wednesday, UBS downgraded Man Group Plc. (EMG:LN) (OTC: MNGPY) stock from Buy to Neutral, adjusting the price target to GBP2.25 from GBP2.90. The shift in rating comes as a response to recent performance challenges faced by the company's key AHL funds, which are now an average of 4% below their high watermarks after experiencing a decline of 10-20% in the past five to six months.
The UBS analyst cited a less certain flow outlook for Man Group as a reason for the downgrade, suggesting that the stock is likely to remain range-bound over the next six to twelve months. This outlook reflects the current market conditions that have impacted the funds and, consequently, the company's potential to generate performance fees.
Alongside the downgrade, UBS also revised its earnings per share (EPS) estimates for Man Group for the years 2025-26 downward by 10-15%. This adjustment is attributed to the anticipation of weaker performance fees, which are a significant component of the firm's revenue.
The lowered price target of 225p, a 22% decrease from the previous target, indicates UBS's recalibrated expectations for Man Group's share value. The new target factors in the recent downturn in the performance of the company's funds and the revised earnings projections.
In conclusion, UBS's updated stance on Man Group reflects a cautious view on the investment management firm's near-term prospects, largely due to the underperformance of its AHL funds and a less optimistic outlook for capital inflows.
In other recent news, Man Group Plc has seen a flurry of activity from analysts. Barclays upgraded the investment management firm's stock from Equal Weight to Overweight, citing a significant drop in Man Group's share price over the past six months, which they believe has led to the market undervaluing the company's ability to generate performance fees. On the other hand, Deutsche Bank initially downgraded Man Group from Buy to Hold, expressing concerns over weakening investment performance and anticipated third-quarter redemption.
However, Deutsche Bank later upgraded Man Group back to Buy, noting a modest recovery in the company's investment performance after a challenging six-month period. The bank's analysis highlighted that the share price movement did not fully account for future performance fees, suggesting potential undervaluation.
Both Barclays and Deutsche Bank adjusted their price targets for Man Group, with Barclays setting a new target of £2.70, reduced from the previous £2.95, and Deutsche Bank setting theirs at GBP2.80, a decrease from the previous GBP3.25. These recent developments underscore the dynamic nature of the financial market and the varied perspectives of different analysts.
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