Intermediate Capital Group (LSE:ICP) has been downgraded to 'neutral' by UBS with a lower share price target as the private equity investment firm's fundraising is expected to slow.
The 12-month price target was cut to 2,170p from 2,450p, as well as removing the former 'buy' rating, as the Swiss bank said the company’s earnings remain resilient, supported by $23.7 billion fundraising in the year to March 2025, though fundraising is expected to slow to $10.5 billion in the current 2026 financial year before recovering in later years.
The company’s profits are mainly from management fees rather than performance fees.
"Near-term earnings momentum is challenging," said UBS, forecasting an 8% decline in fund management profit before tax in the current year, with cost growth forecast to remain at FY25 levels, resulting in negative operating leverage.
ICG trades at about 11 times forecast earnings, "inexpensive versus peers" such as Amsterdam-listed CVC Capital, Sweden's US-listed EQT and Switzerland's Partners Group.
"However, we expect some discount to persist due to ICG's IC earnings volatility", the analysts said, lowering the price target based on a higher cost of capital and limited near-term earnings upside.
They see the company’s longer-term growth depending on scaling its fund strategies, but noted this will not support current year earnings.