Canaccord cuts Jupiter to 'hold', slashes target price by 58%

The broker slashed its target price from 168p to just 70p for the stock, which was up 5.6% at 84.1p on Thursday morning.

"Previously we identified scope for optimism with respect to Jupiter, led by the stabilisation of quarterly retail net outflows (albeit no obvious near-term prospect of net inflows), and the positive momentum in the institutional channel. However, we now see a challenged earnings outlook," Canaccord said in a research note.

The broker is forecasting a compound annual growth rate in underlying earnings per share of -12% from 2022 to 2025, compared with its previous forecast of +7%.

The reasons for this downgrade are: additional pressures on net management fee margins due to changes in its tiered fee structure; competitive cost pressures as a result of incentivising and retaining fund managers whilst average assets under management aren't growing; and general ongoing challenging conditions with no net inflows expected next year.

"The sector is suffering from structural challenges, with net management fee margin compression being a key driver. Further, the macro operating environment, is now fundamentally different from the past 10 years, with higher rates and therefore higher hurdle rates influencing capital allocation decisions," Canaccord said.