Broker snap: Credit Suisse still sees value in Man Group

20th Apr 2012 13:04

Hedge fund manager Man Group was performing strongly on Friday afternoon following the stock's recent sell-off which has seen its share price tank over the last few months. Credit Suisse was providing a lift to the shares today after reiterating its outperform recommendation for the firm.The stock has been extremely volatile since the start of 2012, rising from 128.3p (January 3rd) to 152.5p (March 2nd), then plummeting to yesterday's (April 19th) 52-week low closing price of 93.4p, a peak-to-trough fall of 38%."Whilst the investment case remains challenging as long as AHL [Man's flagship fund] struggles we believe market conditions have been tough for trend following funds, with peers such as Winton and Aspect also struggling in Q112," the Swiss broker said. It expects the medium-term AHL performance to recover saying the "suite of products offered by Man Group is attractive particularly as demands for funds in liquid formats increases."While the broker expects assets under management (AuM) to remain broadly stable at $58.5bn over the first quarter when the group reports its results on May 1st, the full-year AuM estimate has been slashed by 6% to reflect a weaker AHL, the impact of additional de-gearings (around $0.9bn in the second quarter) and slower recovery in flows "although these factors could reverse if AHL gets back into gear".Full-year earnings per share (EPS) forecasts have been cut by 30% to 12.6 cents and the target price for the stock subsequently falls back to 130p from 175p.Nevertheless, Credit Suisse has maintained its overall positive rating on the stock, "viewing the share price capitulation as a longer-term buying opportunity", with the new target price offering around 40% potential upside.Shares were up 3.16% at 96.35p by 14:08, still down 13.65% on the week.BC