JPMorgan reiterates ‘underweight’ on Ashmore, says re-rating has gone too far
Ashmore Group
156.80p
16:45 20/12/24
JPMorgan Cazenove nudged down its price target on Ashmore on Monday and reiterated its ‘underweight’ rating as it argued that the re-rating has gone too far.
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The bank, which trimmed its price target to 184p from 185p, noted that Ashmore’s shares have rebounded by around 8% in the past month, driven by better market performance and a slower pace of net outflows in Q4 23.
It said that even though fiscal H1 24 results beat what seemed to it like a "stale" consensus, the H1 24 adjusted EBITDA was 10% below its expectations. As a result, the bank cut its adjusted earnings per share estimates by around 9% on average for FY24-27E.
JPM said that even though it forecasts a gradual net flow recovery, it does not expect a return to double digit $bn net inflows.
"At 18.9x 2025E price-to-earnings (or 12.7x excluding excess capital) Ashmore is the most expensive stock within our traditional asset managers coverage," it said.
"We believe the circa 25% multiple rerating since October 2023 has gone too far, and reiterate our underweight recommendation."
At 0850 GMT, the shares were down 2.3% at 224.26p.