UK asset managers offer "enticing" entry point, says Exane

14th Sep 2015 09:36

(ShareCast News) - Exane BNP Paribas took a look at UK asset managers, noting that their shares have sold off sharply, making for an enticing entry point."Equity market volatility is a risk to inflows, but historically the impact has been temporary and flows into other asset classes do not suffer as much. Unless the market falls sharply, we think the outlook is strong."Exane initiated coverage of Henderson Group at 'outperform' with a 310 price target, saying it's the bank's top pick among the UK asset managers. It said the company has the best flow prospects and margin dynamics and is the most exposed to growth areas in asset management."With 83% of assets under management outperforming over three years and the European equities funds in particular doing very well, this leads to strong flow prospects in the medium term," the bank said.It started Man Group at 'outperform' with a 190p price target, saying there's a high probability the company will make further acquisitions in the next 12-24 months. "Our analysis of previous deals shows that they have been value-accretive," it said.Exane said it's optimistic on flows at GLG, with Japan Core Alpha reopening, a good performance in Long Only Funds and a rebound in performance in Long/Short Equities. In addition, it expects the stellar performance at Numeric to translate into strong flows and sees material upside risk to revenue margins.Exane started Aberdeen Asset Management at 'underperform' with a 270p price target. It said Abederdeen has concentrated exposures to three flagship desks from which it expects further material outflows - global, global emerging markets and Asia Pacific equities - which together make up 60% of group revenues.In terms of mid caps, it started Ashmore Group and Jupiter Fund Management at 'neutral' with price targets of 250p and 470p, respectively.For Ashmore, it said the current macro backdrop and performance challenges limit visibility on improvement in flows. "We think any improvement in sentiment toward the shares will need to be driven by an increase in investor appetite for emerging market debt."As for Jupiter, Exane said it sees a balanced risk/reward stock.