JPMorgan Reiterates Underweight Stance on Ashmore Group as Price Target Holds Steady
JPMorgan has maintained its Underweight rating on Ashmore Group, with a steady price target of GBP 1.84. The firm’s analyst highlighted the recent 8% rise in Ashmore’s shares, which can be attributed to improved market performance and a slowdown in net outflows during Q4 of 2023. However, while Ashmore’s first-half fiscal year 2024 results exceeded initial consensus expectations, its adjusted EBITDA fell short of JPMorgan’s forecast by 10%.
The analyst further noted the need to revise earnings per share (EPS) predictions downward by around 9% for fiscal years 2024 to 2027. This adjustment takes into consideration Ashmore’s recent performance and future projections, which include a gradual recovery in net flows but no expectation of a return to double-digit billion-dollar net inflows.
JPMorgan also evaluated Ashmore’s stock valuation, finding it to be the most expensive among the traditional asset managers covered by the firm, with a multiple of 18.9 times the estimated earnings for 2025, or 12.7 times when excluding excess capital. The analyst expressed concern over the approximately 25% multiple re-rating of Ashmore’s stock since October 2023, deeming it excessive.
The reiteration of the Underweight rating by JPMorgan reflects the firm’s outlook on Ashmore’s market position and future earnings potential. Despite the positive market performance and exceeding expectations in the first half of fiscal year 2024, caution is advised regarding Ashmore’s stock value relative to its earnings outlook and overall market performance.
The current price target of GBP 1.84 remains unchanged, as JPMorgan continues to emphasize the need for cautious evaluation of Ashmore’s stock value in relation to its earnings potential and the overall market conditions.
Analyst comment
Negative news.
As an analyst, the market is expected to remain cautious on Ashmore Group due to JPMorgan’s reiteration of the Underweight rating and the concerns raised about the stock valuation and earnings outlook. The steady price target suggests limited upside potential in the near term.
