Aberdeen Asset Management boosted by RBC Capital upgrade

8th Feb 2017 09:26

(ShareCast News) - RBC Capital Markets has upgraded Aberdeen Asset Management to 'sector perform' from 'underperform' but trimmed the target price to 285p from 290p.The bank said the risk in the near term is to the upside based upon an oversold share price, a reasonable valuation, a high dividend yield, stabilising revenue margin, well controlled cost base, and the real possibility of M&A."Aberdeen's negatives are well-known by the market and more than reflected in the share price; we thus believe an upward redistribution of analyst ratings is more likely than an increase in the negative bias of the distribution."RBC said the biggest risk remains a recovery in net flows. Aberdeen has experienced around £80bn in net outflows in the last nine quarters alone, and since the beginning of full-year 2014, equity net outflows are around £50bn."Despite these staggering statistics and our forecast for elevated net outflows in FY17E, we anticipate a material recovery in flows in FY18E. Should flows not recover as we anticipate, today's upgrade could be premature."At 0935 GMT, the shares were up 3.1% to 258.60p.