Numis cuts Schroders target after Q1 AuM miss

The broker cut its target for the stock from 380p to 365p and kept a 'hold' rating.

As at the end of March, Schroders' assets under management (AuM) were £760.4bn, up from £750.6bn at the end of December 2023, but 1% shy of the consensus estimate of £769bn and 3% short of Numis's own £782.6bn forecast.

"All areas fell slightly short of our and consensus expectation, with Solutions the biggest detractor (c.3-4% light)," Numis said.

The broker said that, given that Schroders does not publish a flow/performance breakdown, it's hard to accurately determine whether this is due to flows or performance – or both. However, "we think it is reasonable to assume though that the group was in net outflow in most areas of the business, given the reported AuM and market movements in key asset classes in the period."

Numis has reduced its earnings per share forecasts for Numis over the next two years by 7% and 8% respectively.

"We believe that, on balance, the ongoing strategy to reposition the group towards Private Markets, Wealth and Solutions is the right one for the group, however the traditional areas still dominate today," the broker said. "Consequently, if investors desire exposure to these higher growth parts of the industry, we would advocate investing in the pure plays in those areas, rather than Schroders."

The stock's current valuation – trading at around 12 times forward earnings – is "fair" for now, according to Numis.

The shares were down nearly 3% at 280p by 1127 BST.