Credit Suisse turning positive on asset managers, upgrades Schroders and Jupiter

4th Nov 2014 09:56

Credit Suisse said on Tuesday that it is "turning more positive" on the European asset-management sector as it upgraded its ratings for Schroders and Jupiter Fund Management.Following market weakness at the end of the third quarter and beginning of the fourth, Schroders is now rated 'outperform' (previously 'neutral') and Jupiter is rated 'neutral' (previously 'underperform').The bank also reiterated its 'outperform' recommendation for Man Group, saying that the firm should deliver "best-in-class" earnings and dividend growth over the next three years. Its current valuation also looks "undemanding".Credit Suisse expects European asset managers to deliver strong compound annual growth rates in earnings per share between 2014 and 2016, "which, combined with strengthening surplus capital positions, indicates scope for a significant ramp-up in shareholder distributions", it said.The sector is now trading at a small discount to its average price-to-earnings ratio over the past five years. As such, the bank said it now sees a "window of opportunity to pick up high-quality names on attractive valuations".It said: "For quality and resilience, we prefer Schroders; for growth and dividend potential, we prefer Man Group; and for stability of earnings and relative insulation from equity market volatility, we prefer [Switzerland-listed] Partners."On a negative note, Credit Suisse has also downgraded its ratings for sector peers Ashmore and Hargreaves Lansdown to 'underperform' and 'neutral' respectively.