UBS revises target price on Ashmore Group higher

UBS bumped up its target price on shares of Ashmore Group following its most recent interims and a detailed analysis of its quarterly gross inflows.

Analyst Michael Werner highlighted the Emerging Markets investment manager's earnings beat on first half 2017 earnings per share, which led it to push its EPS forecast for the full-year higher by 23.0%.

That beat was driven by its best performance fee realisation in five years, Werner said.

Furthermore, upon close inspection the trends in its gross inflows and outflows for the latest six months revealed that the outflows were concentrated over the three to four weeks after the US elections, falling sharply afterwards.

Excluding those, Ashmore would have registered inflows to the tune of $1bn in the three months to December, instead of $700m of outflows.

"This increases our confidence in the firm's ability to generate inflows beginning in the March quarter (+US$500mn) and then to grow these inflows in the coming quarters and years," the analyst said.

The Swiss broker also hailed the firm's strong discipline on both non-staff and staff fixed costs, with the former having been pared for a third consecutive half.

Werner reiterated his 'buy' recommendation on the stock and revised his target price higher from 350.0p to 390.0p.