Morgan Stanley downgrades 3i Group after strong run
3i Group
2,998.00p
16:55 05/07/24
Morgan Stanley downgraded 3i Group on Wednesday ‘equalweight’ from ‘overweight’ and cut the price target to 3,192p from 3,246p as it said the risk/reward is more balanced after a strong run.
Financial Services
14,729.81
16:48 05/07/24
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16:49 05/07/24
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4,486.08
16:50 05/07/24
The bank said 3i offers significant appeal, given the strong compounding characteristics at key asset Action. But with more than 10% upside to its price target after a strong sustained run - the shares are up 125% since start of 2023 - it is moving to ‘equalweight’.
Morgan Stanley noted that 3i's valuation is close to the historical peak of around 1.4x P/NAV based on March 2024 NAV.
It said gearing to capital market recovery and a re-acceleration at Action are key to upside.
The bank said it was trimming its NAV estimates by around 2% for FY25-27 following the AGM statement, which indicated modest moderation in Action like-for-like growth.
At 0850 BST, the shares were down 1.5% at 3,000p.