Broker snap: Ashmore underestimated by market forecasts, says Canaccord

11th Apr 2013 09:25

Canaccord Genuity has reiterated its 'buy' rating and 399p target rice for asset management group Ashmore after a trading update showed strong inflows in the third quarter.Assets under management (AuM) increased by 9.4% to $77.7bn during the three months to March 31st, helped by net inflows of $7.3bn.Canaccord said: "A very strong set of numbers highlights our previously stated view that bond rotation is not taking place. This is supported by other data series we follow as proxy to the market allocation."The broker had estimated Ashmore to record AuM of $77.8bn by the year end so the group has hit this target (nearly) one quarter in advance."Ashmore offers investor a good entry point in respect of price-to-book multiple with much of the emerging market premium inherent in the stock, in the past, has dwindled away. [...] With no debt on balance sheet, a strong cash generation and c. $330m of balance sheet cash at H113 we expect dividend to be progressively strong."With the stock trading at 14.2 times consensus adjusted estimates for the current year (and 13 times earnings next year), the broker said that the forecasts "underestimate the growth potential of this franchise".The stock was up 12.31% at 398.6p by 09:35 on Thursday.BC