On Friday, Abrdn Plc (ABDN:LN) (OTC: SLFPY) received a revised stock rating from Jefferies, with the firm maintaining a Hold rating on the company's shares but lowering the price target to £1.55 from the previous £1.80. The adjustment follows a reassessment of the company's financial segments and their contribution to Abrdn's profits.
The analysis by Jefferies highlighted that while the Adviser and ii segments accounted for a significant portion of the adjusted operating profit for the fiscal year 2023, they represented a smaller fraction of the Assets Under Management and Administration (AUMA), at just 28%. Furthermore, the first quarter of 2024 saw positive net flows only in a single line of equity and fixed income, specifically Developed Market (DM) credit.
Jefferies noted potential challenges in balancing the needs of Phoenix with the necessary changes within the Investments division of Abrdn. Despite these concerns, the firm acknowledged the inherent value in the ii segment. The coverage transition to analyst Julian Roberts, who specializes in other UK platforms, comes with an adjusted outlook and a reduced price target for Abrdn's shares.
The reduction in the price target reflects Jefferies' assessment of Abrdn's performance and the firm's expectations for the company's financial health moving forward. This new target is set in the context of the company's recent net flows and the distribution of profits across its various segments.
In other recent news, Abrdn Plc has seen its price target raised to GBP1.40 from GBP1.35 by RBC Capital Markets. This adjustment comes on the heels of Abrdn's first-quarter report, which revealed assets under management (AUM) of £507.7 billion, slightly above RBC Capital Markets' projections. The higher-than-expected AUM has led to an upward revision of the adjusted operating profit forecast by an average of 2% for the fiscal years 2024 through 2026.
Despite the price target increase, RBC Capital Markets maintains an Underperform rating on Abrdn's shares. The firm noted that Abrdn's focus on emerging markets and Asia, particularly in equities, is expected to continue impacting the fund's performance. RBC Capital Markets also pointed out the challenges Abrdn faces in terms of net flows, attributing this to the company's strategic emphasis on specific geographic regions.
While the updated price target reflects a slight optimism based on recent AUM figures, RBC Capital Markets' stance remains cautious due to performance issues related to Abrdn's market focus.
InvestingPro Insights
Following Jefferies' updated analysis of Abrdn Plc, current metrics from InvestingPro show a nuanced financial picture. Abrdn's aggressive share buyback strategy, as noted by InvestingPro Tips, indicates a strong management belief in the company's value. Additionally, the company has demonstrated a commitment to its shareholders with an impressive 18-year streak of consistent dividend payments and a notable dividend yield of 16.68% as of the last twelve months ending Q4 2023.
InvestingPro Data further reveals a high earnings multiple, with an adjusted P/E ratio of 134.54, which could suggest a premium valuation by the market. Despite a decrease in revenue growth, Abrdn maintains a robust gross profit margin of 94.84%. Investors should note that while the company's stock has experienced a downturn in the short term, with a 1-month price total return of -6.12%, the long-term commitment to dividends and share repurchases may appeal to income-focused investors.
For those considering a deeper dive into Abrdn's financial health, InvestingPro provides additional insights and tips. With the use of coupon code PRONEWS24, new subscribers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 9 InvestingPro Tips for Abrdn Plc, including predictions on profitability and net income growth for the year.
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