Broker snap: UBS downgrades St James's Place on cautious outlook

3rd Nov 2011 10:29

UBS has downgraded FTSE 250 wealth management group St James's Place from buy to neutral, saying that yesterday's solid quarterly update is overshadowed by an cautious outlook.Shares took a hit on Wednesday after the firm said that funds under management (FUM) were down over the three months ended 30 September, owing to the recent fall in global stock markets. FUM fell by 8% to £26.7bn but this was in line with UBS and consensus forecasts."St James's Place has been the best performing life insurance stock in the world this year and is the best managed domestically focused life company. However, it is not immune from market forces and macro uncertainty is beginning to affect its momentum," UBS said.However, the broker does note that yesterday's news on the Lloyds management team (with its chief executive taking a temporary leave of absence) suggests that there is less change of a decision on their 60% shareholding in St James's Place, "reducing overhang concerns".Nevertheless, UBS says that while the Lloyds situation may provide some short-term support, the cautious outlook has prompted it to cut its earnings per share forecasts for 2011 by 5%, and for 2012 and 2013 by 10%.The target price is cut from 407p to 353p.The stock was edging 0.09% higher at 336.70p by 10:28 on Thursday, following yesterday's sell-off.BC