Broker snap: Consensus downgrades likely a Ashmore, says Numis

14th Jan 2014 09:43

Numis Securities has maintained a 'hold' rating for fund manager Ashmore, saying that downgrades to consensus estimates are likely after the group's disappointing second-quarter update.The company reported that assets under management (AuM) totalled $75.3bn by the end of December 2013, down 4.1% from $78.5bn in the first quarter of its financial year."AuM at $75.3bn, was 6% light of the $79.9bn we had estimated (which we estimate was also broadly where consensus was), driven by net outflows of $3.5bn compared to the net inflows of $1.4bn we had estimated," said Numis analysts David McCann and James Hamilton.Ashmore also said that it is reducing the basis of fees on two segregated alternative accounts, which will lead to a $25m annualised net fee decline. This, the analysts said, implies a £12m downgrade to their underlying operating profit forecast of $229m for the year ending June 2014."Ashmore trades on c.16x [current-year earnings] and c.14x ex surplus capital. Given the modest short- to medium-term outlook for earnings per share growth (mainly driven by margin compression), we think the shares are fairly valued, rather than cheap. "We view Ashmore as a core long-term holding, but one which we believe offers only fair value today."The broker maintained its 390p target price for the stock.Ashmore was trading 12.76% lower at 356.63p by 10:10 on Tuesday morning.BC