Canaccord slashes target price on Schroders

23rd Apr 2020 13:02

(Sharecast News) - Analysts at Canaccord Genuity slashed their target price on investment manager Schroders from 3,270p to 2,539p on Thursday, citing some near-term downside risks.
Canaccord highlighted potential downside risks to consensus forecasts, primarily on costs, but said if equity market performances played out per its base case, with the recovery post-crash set to be maintained in 2020, then action on staff costs would be "limited".

"Post the market correction, we have cut our EPS forecasts by 37% in both FY20 and FY21. We now expect the dividend to be maintained on the FY19 level of 114p through to FY22E, which is a 4.4% yield in each year," said the analysts.

As a result, the Canadian broker modelled a total comparative ratio of 47.5% in 2020, which it believes exceeds consensus.

However, while Canaccord noted that its bull and bear cases were "not symmetric" but rather reflected its research on how crises have developed in the past, it said even its downside scenario with the group's share price currently yielding 4.4%, that figure should provide ongoing support to the share price.

Canaccord maintained its 'hold' rating on Schroders.