Barclays downgrades Schroders, bumps up Jupiter

Barclays downgraded Schroders to ‘equalweight’ from ‘overweight’ and cut the price target to 3,140p from 3,450p as it took a look at European diversified financials.

It said Schroders modestly disappointed on its third quarter flows and assets under management update with its market-leading positions in Singapore, Hong Kong and Taiwan acting as a drag on flow outlook.

“With a slowing flow momentum and hence EPS growth profile, we downgrade the stock,” it said, adding that the target price cut reflects a de-rating to the peer group average.

The bank said it was replacing Schroders with Henderson as its top pick. Henderson is rated ‘overweight’ with a 320p price target and Barclays said it retains the strongest flow momentum among its peers.

It said Henderson’s balance sheet has been repaired, with management signalling confidence by doing a £25m share buyback by year end. The bank added that a 2016 price-to-earnings multiple of around 15.5x appears attractive for the flow and earnings momentum.

Barclays upgraded Jupiter Fund Management to ‘overweight’ from ‘equalweight’, lifting the price target to 520p from 450p.

It said Jupiter surprised with resilient mutual fund net inflows of £1.55bn for the first nine months of the year, despite the market volatility in June to August and a depressed first quarter flows backdrop in the UK.

At 1520 GMT, Schroders shares were down 0.7% at 2,992p, while Jupiter was up 1.1% at 464.50p and Henderson was 1.1% higher at 293.10p.