Broker snap: RBS hikes estimates for Schroders on cost performance

5th Aug 2011 13:34

RBS has hiked its target price for global asset management firm Schroders after its first half earnings beat expectations, reflecting a "strong cost performance".Schroders delivered first half diluted earnings per share (EPS) of 57.8p, 5% ahead of the 56p consensus forecasts, and reported a better management fee margin and lower operating costs."In our view, this diversified and well-capitalised asset manager offers very appealing valuation metrics for investors with a long-time horizon and strong constitution," said analyst Nicolas Burgess and Daniel Do-Thoi.As such, RBS raises its EPS forecasts for 2011 and 2012 by 7.8% and 7%, respectively, "due to the better than expected cost performance and a lower than expected tax rate."A buy recommendation is kept.Nevertheless, the stock was not immune to the global sell-off experienced on Friday, with shares falling 2.62% to 1,521p at 13.34pm.