Man Group boosted by Citi upgrade

Citi upgraded Man Group to ‘buy’ from ‘neutral’ and lifted its target price to 137p from 125p on Monday.

The broker said the asset management business meets its preference for stocks that can deploy capital successfully and have differentiated offerings in key products, such as alternative investments.

“Man Group fits well into this framework, and alongside improving fund performance, foreign exchange benefit and inexpensive valuation versus historical levels, this leads us to upgrade to ‘buy’, with a new 137p target.”

Citi said while Man Group is one of the few asset management stocks that has failed to bounce back from post-Brexit lows, it stands to benefit the most from the Sterling weakness following the referendum.

The company also has $470m surplus capital and has expressed its appetite for deals in the US, in private assets.

“A successful deal could be key for the group, in our view. But even in the absence of the right deal, we think Man could instead reinstate share buybacks as early as Spring 2017.”

Citi raised its earnings per share (EPS) forecast for fiscal year 2016 to 10.7 cents from 10.2 cents, reflecting signs of improvement in its fund management business GLG. It also lifted its estimate for EPS in 2017 to 14.9 cents from 13.7 cents.

Shares rose 0.95% to 117.10p at 0948 BST.