RBC Capital Markets lowers target price on Rathbones Group

17th Oct 2022 10:26

(Sharecast News) - Analysts at RBC Capital Markets lowered their target price on investment manager Rathbones Group from 2,100.0p to 1,950.0p on Monday as it updated its model on the firm ahead of its third-quarter trading statement.

RBC said it was updating its forecasts for Rathbones across its forecast period, as it expects "negative recent market movements" to outweigh the benefit of higher interest rates.

The Canadian bank expects group funds under management to have reduced by 3% quarter-on-quarter to £58.9bn, within this it expects minor positive net inflows of £100.0m to be offset by said market movements.

"We expect net operating income of £109.9m for the quarter, up 3% year-on-year, helped by higher net interest income as well as the positive contribution from Saunderson House," said the analysts, who also reduced their earnings per share estimates by 5% across all years.

"The changes to our forecasts lead us to lower our price target, however, we still see clear upside potential in the shares. Rathbones remains one of the leading franchises within a UK wealth market that has secular growth drivers. We consider the current FY23E P/E of 12.7x as undemanding (particularly given multiples paid acquisitions in the sector over the last two years), and retain our 'outperform' rating."

Reporting by Iain Gilbert at Sharecast.com