Ashmore Group PLC’s (LON:ASHM) valuation is “looking stretched” and the premium of the share price to the rest of the sector “has now gone too far”, according to analysts at Shore Capital as they downgraded the investment manager to ‘sell’ from ‘hold’.
In a note on Monday, the broker said they had downgraded their forecasts for the FTSE 250 firm on a “sharper than expected contraction” in its blended management fee yield, although based on their new forecasts they had raised the fair value of the stock to 415p from 405p.
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“With the risk of inflation shocks arguably higher than for many years, which are never good news for bonds, we think the risk/reward in the current share price is unfavourable and the safe dividend yield (on a likely flat payment) of 3.6% no longer offers valuation support”, ShoreCap said.
However, despite this the broker maintained that the company is “well-managed”, however, their new fair value was “too far below the current [share price] to maintain a Hold stance”.
Shares in Ashmore were 0.3% higher at 475.4p in late-morning trading.