Abrdn Plc (ABDN:LN) (OTC: SLFPY) received a rating review from Jefferies on Friday, which maintained a “Hold” rating on the company’s stock but lowered its price target to 1 .55 pounds from the previous 1.80 pounds. The adjustment follows a reassessment of the company’s financial segments and their contribution to Abrdn’s earnings.
Jefferies’ analysis highlighted that while the Adviser and ii segments represented a significant portion of adjusted operating profit for fiscal 2023, they represented a smaller fraction of Assets Under Management and Administration (AUMA), with just 28 %. Furthermore, the first quarter of 2024 saw positive net flows in only a single line of equities and fixed income, namely developed market (DM) credit.
Jefferies noted the potential difficulties in balancing the needs of Phoenix with the changes needed within Abrdn’s Investments division. Despite these concerns, the company recognized the intrinsic value of the ii segment. The shift in coverage to analyst Julian Roberts, who specializes in other UK platforms, is accompanied by a revision of the outlook and a reduction in the price target for Abrdn shares.
The reduction in the price target reflects Jefferies’ assessment of Abrdn’s performance and the company’s expectations about its financial health going forward. The new target is set in the context of the company’s recent net flows and earnings distribution across segments.
In other recent news, Abrdn Plc saw its price target increased to GBP1.40 from GBP1.35 by RBC Capital Markets. This correction comes on the heels of Abrdn’s first-quarter report, which revealed assets under management (AUM) of £507.7 billion, slightly higher than RBC Capital Markets’ forecast. The higher-than-expected AUM led to an upward revision of adjusted operating profit forecasts by an average of 2% for fiscal years 2024 through 2026.
Despite the price target increase, RBC Capital Markets maintains an Underperform rating on Abrdn stock. The firm noted that Abrdn’s focus on emerging markets and Asia, particularly equities, is expected to continue to influence the fund’s performance. RBC Capital Markets also highlighted the challenges Abrdn faces in terms of net flows, attributing these to the company’s strategic emphasis on specific geographic regions.
While the price target update reflects slight optimism based on recent AUM data, RBC Capital Markets’ stance remains cautious due to performance issues related to Abrdn’s market focus.
Insights from InvestingPro
Following Jefferies’ updated analysis of Abrdn Plc, InvestingPro’s current metrics paint a nuanced financial picture. Abrdn’s aggressive share repurchase strategy, as noted by InvestingPro Tips, indicates management’s strong confidence in the company’s value. Furthermore, the company has demonstrated a commitment to shareholders with an impressive 18-year streak of consistent dividend payments and a notable dividend yield of 16.68% over the trailing twelve months, through the fourth quarter of 2023.
InvestingPro Data also reveals a high earnings multiple, with an adjusted P/E ratio of 134.54, which may suggest a premium valuation by the market. Despite the decrease in revenue growth, Abrdn maintains a solid gross profit margin of 94.84%. Investors should note that while the company’s stock has fallen in the short term, with a 1-month total price return of -6.12%, its long-term commitment to dividends and stock buybacks shares may be of interest to income-oriented investors.
For those wishing to learn more about Abrdn’s financial health, InvestingPro provides further insights and suggestions. Using the coupon code PRONEWS24new subscribers can get an additional 10% off an annual or two-year Pro and Pro+ subscription, unlocking access to a total of 9 InvestingPro recommendations for Abrdn Plc, including profitability and net profit growth forecasts for the year.
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