Societe Generale hikes Man Group target, reiterates 'Buy'

The rise in target price reflected the brokerage's earnings per share (EPS) adjustments for Man; down 2.7% to 0.098p for full-year 2016, up 5.1% to 0.152p for 2017 and up 6.2% to 0.187p for 2018.

"We upgraded Man to 'Buy' last month ... highlighting the improvement in its risk profile following a change to a largely institutional client base in the last four years," said Societe Generale equity analyst Michael Sanderson.

"Better-than-anticipated net inflows of $1.3bn reflected this," he said in a statement.

Sanderson further noted Man's acquisition of real asset-focused investment manager Aalto was set to bring future accretion.

"Aalto reported AuM of $1.7bn at 30 June, and FY15 revenues of $10m but nil profit. As a result, FY17 accretion could be very limited," Sanderson said.

"However, Man has set aside $75m of capital, indicating potential AuM growth of about 3.5-times over the eight-year period and material future accretion."

Sanderson added that a $100m buyback was central to near-term EPS upgrades.

"Mans lower share price means this fresh buyback is set to increase FY17-estimated and FY18-estimated EPS by over 4%, as we expect the company to act quickly, as it has done with prior buyback transactions, and to complete it in 2016."

At 13:02 BST, shares in Man Group were down 0.4% to 123.2p.