On Tuesday, UBS upgraded Schroders (LON:SDR) Plc stock, listed on the London Stock Exchange as SDR:LN and over-the-counter as OTC: SHNWF, from a Neutral to a Buy rating. The investment firm also set a new price target for Schroders at GBP4.30.
The upgrade comes after Schroders' stock performance lagged behind its peers and broader market indices this year. The company's shares have fallen by 9% year-to-date, underperforming the STOXX 600 by 16% and other listed European asset managers by 11%.
This decline has brought Schroders' forward 12-month price-to-earnings (P/E) multiple down to 10.5x from 12.6x, positioning it in the bottom fifth percentile relative to its historical P/E multiples.
UBS noted that while there may not be any immediate catalysts to propel the stock upwards, the current valuation levels present an attractive risk-reward balance for investors. The firm believes that despite the lack of short-term triggers, the investment case for Schroders is strengthened by the stock's valuation metrics.
The financial performance and market valuation of Schroders have been closely monitored, with the company's P/E multiple contraction signaling a potential undervaluation compared to historical standards. UBS's new price target reflects an anticipation of potential upside from these levels.
Investors and market watchers will be keeping an eye on Schroders to see if the stock can rebound from its current position and move towards the new price target set by UBS. The asset management firm's future performance in the market will be of interest, particularly in light of the more favorable outlook now presented by UBS.
InvestingPro Insights
Following UBS's upgrade of Schroders Plc, the InvestingPro data and tips provide additional context for investors considering the stock. The company's market capitalization stands at $7.52 billion, with a trailing P/E ratio of 11.12, suggesting a more modest valuation compared to the industry average. The price-to-book ratio as of the last twelve months is at 1.33, reinforcing the notion of a potentially undervalued stock.
InvestingPro Tips highlight that Schroders has a track record of maintaining its dividend payments for 33 consecutive years, which could be a sign of the company's commitment to shareholder returns. Moreover, the company has been profitable over the last twelve months, which aligns with UBS's positive outlook. While analysts anticipate a sales decline in the current year, they remain optimistic about the company's profitability.
With these insights, investors may find additional reasons to consider Schroders as a potential addition to their portfolios. For those looking for more in-depth analysis, InvestingPro offers further tips on Schroders at https://www.investing.com/pro/SHNWF. Additionally, readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, where they can access a total of 5 InvestingPro Tips for Schroders.
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