JPMorgan reiterates ‘underweight’ on Ashmore, says re-rating has gone too far

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.