Canaccord Genuity downgrades Jupiter Fund Management to 'sell'

Canaccord Genuity said Jupiter's new chief executive, who takes over on 1 October, must set about stabilising the shrinking the group's assets under management base while simultaneously cutting costs.

"Maintaining the dividend is unsustainable if the capital surplus is to be protected, so the question is not if, but by how much future dividends are cut," said Canaccord, which also halved its target price on the stock to 114.0p.

The Canadian bank said its new underlying earnings per share forecasts were 8%, 22%, and 26% below consensus estimates over the next three years and stated it believes consensus takes "a more optimistic view" than it does on market levels and net flows.

"We forecast net outflows of £2.0bn in H2 2022, a reduction versus the £3.6bn net outflows experienced in H1 2022. We forecast a return to marginal inflows of £200.0m in FY23E. We believe the risk to our net flow forecasts is skewed to the downside. It is worth noting that between 2018 and H1 2022, Jupiter has suffered a cumulative £20.5bn of net outflows," said the analysts.

Canaccord added that its forecasts reflected management guidance on costs for H2 but said "significant cuts" may or may not materialise.

Reporting by Iain Gilbert at Sharecast.com