RBC Capital downgrades M&G to ‘sector perform’

RBC Capital Markets downgraded M&G on Tuesday to ‘sector perform’ from ‘outperform’ and cut the price target to 200p from 220p as it turned more cautious on asset management.

The bank said headwinds for asset management now appear more acute and persistent than it expected.

"While acknowledging positive impacts of the higher rate environment on M&G’s Life insurance earnings and capital generation, which supports upgrades to group adjusted operating profit, our cautious outlook for AM means we are below consensus for 2024E/25E," it said.

"Given M&G’s year-to-date total shareholder return of 20%, and the material de-rating of UK Life and Euro AM sector peers with each sector returning -4% YTD on average, we reduce our conviction in the shares."

At 1250 GMT, the shares were down 2.7% at 202p.