Deutsche Bank has materially downgraded its earnings forecasts and price target on Rathbones Group PLC (LSE:RAT, OTC:RTBBF), the wealth manager, following Tuesday's profit warning.
The bank cut its target to 1,700p from 2,100p, a reduction of 19%, while maintaining a hold rating.
That still leaves modest upside to Tuesday's closing price of 1,620p.
The downgrade follows an unexpected regulatory update from Rathbones and an accompanying profit warning that took the market by surprise.
Deutsche said the development meant the group would take a few further steps back before investors could see it moving forward again.
Rathbones had previously been widely viewed as an emerging self-help story under new management and a refreshed strategy, operating in a structurally attractive industry.
That investment thesis now looks pushed further out, with meaningful and visible operating improvement harder to pin down.
The shares look cheap on most valuation metrics, Deutsche said.
But the bank struggles to see what might drive a re-rating or share price recovery in the short term, absent a bid approach or a broader market tailwind.
Neither possibility is factored into Deutsche's revised numbers.
