Citi has upgraded Aberdeen Group PLC (LSE:ABDN) to buy from neutral, setting a new target price of 265p and arguing that the asset manager's recent share price gains have only partially reflected the upside available to investors.
The stock has risen around 10% over the past month, outperforming the majority of traditional asset managers, but Citi said there remains plenty to play for and was up 5.4% at 238.3p on Friday.
The bank sees up to 20% upside to consensus earnings estimates, noting that its own forecasts have not yet fully incorporated the benefit of recent positive market moves, suggesting further upgrades could follow.
Beyond earnings momentum, Citi highlighted significant re-rating potential across Aberdeen's business divisions, particularly the investments arm and interactive investor (ii), the direct-to-consumer investment platform acquired in 2022.
On the bank's revised numbers, Aberdeen trades on 12 times headline price-to-earnings for the financial year ending 2027.
Stripping out surplus capital and the value of listed stakes, that multiple falls to 8.5 times, which Citi estimates implies a valuation of just 12.5 times for the adviser and fast-growing ii businesses combined.
The bank described that implied multiple as looking reasonable, suggesting the market is not yet giving full credit to ii's growth trajectory or the strategic optionality within the wider group.
Citi's new 265p target price implies a total expected return of around 25%, including dividends.
The upgrade comes at a time when traditional asset managers have broadly lagged the wider market, weighed down by persistent outflows from active strategies and fee pressure across the industry.
Citi's view is that Aberdeen's mix of a growing platform business, surplus capital, and listed investments provides a differentiated setup that the market has been slow to recognise fully.