Peel Hunt downgrades Ashmore to 'hold' from 'buy'

Peel Hunt downgraded Ashmore Group to ‘hold’ from ‘buy’ and retained its target price at 270p after company reported its third quarter interims.

Total assets under management (AuM) at Ashmore rose 4% to $51.3bn in the third quarter compared with the previous quarter while net outflows slowed to $1.1bn.

The asset manager, which focuses on emerging markets, saw net outflows in blended debt, external debt, corporate debt, multi-asset and local currency.

The three months to the end of March saw strong returns from emerging markets assets as value was recognised and prices recovered from over-sold levels earlier in the period.

Peel Hunt said its current forecast is for pre-tax profit of £130.5m and earnings per share of 13.4p, broadly in line with consensus of £133m and 14.4p, respectively.

“Would expect to modestly upgrade this given rising AuM (versus our forecast of slight decline over the second quarter),” the analyst said.

“Also likely to be profit and loss benefit from US dollar strength versus pound and subsequent impact on cash balances. “

On the valuation, Peel Hunt said the stock has recovered strongly over last few months by 50% in three months and is now trading on December 2016 enterprise value/net operating profit after tax multiple of 16.4x, yielding 5.7%.

“Stock now needs forecasts to catch up, recommendation moves back to ‘hold’, target price remains 270p.”

Shares rose 2.21% to 301p at 0951 BST.