JPMorgan relaunches coverage of Man Group at ‘overweight’

The bank said Man has built a strong active multi-manager franchise, managing money across absolute return, total return and long-only strategies.

"Its key flagship strategies have consistently generated positive performance, which has helped Man attract higher net flows than the active management industry in recent years," it said.

"Even though performance in the key flagship funds was weak in Q1 23, we have seen an improvement in recent weeks which bodes well for a better performance fee outcome in H2 23.

"Importantly, we expect Man to continue seeing strong net flows into alternative strategies, which we estimate should result in a management fee earnings per share compound annual growth rate of 15% between 2022 and 2026E, which in our view is not currently priced into its current valuation of 8.5x 2024E P/E."

Moreover, JPM said Man’s shareholder-friendly capital returns policy consisting of both ordinary dividends and buybacks should provide further support to the shares.

JPM’s adjusted EPS estimates are 6% below consensus in 2023 due to its more conservative cost assumption. However, it is 5% above consensus EPS for 2024 and 12% above for 2025, mainly on the back of share count reduction due to the expected buybacks.

At 1055 BST, the shares were up 1.4% at 229p.