Bank of America reiterates M&G 'Buy' rating following 'impressive' H1 flows
On the back of analyst predictions of £2.2bn in net outflows for the period, Bank of America said the firm’s asset management flows “impressed” them.
In its half-year results to the end of June 2023, the asset manager reported that adjusted profits before tax had jumped 31% to £390m, beating analyst expectations of £284m.
Strong inflows into its wholesale asset management business drove net inflows of £700m during the period despite heavy redemptions from its institutional client base, while assets under management and administration fell by 4.7% to £332.8bn.
M&G profits jump by 30% despite assets falling as institutional outflows grow
In a research note, analysts Andrew Sinclair, David Barma and Freya Kong said M&G was «on the right path», citing improving asset management flows and «strong» fund performance, with cost savings to follow.
«M&G is building an attractive equity thesis under its new management team. Flows have improved, supported by strong fund performance, and we expect cost control to support profit growth,» they said.
On the back of analyst predictions of £2.2bn in net outflows for the period, Bank of America said the firm's asset management flows were impressive. Going forward, they said net inflows were likely to accelerate, supported by a «return to vogue» for fixed income.
The bank also forecast that profits could grow at a compound annual growth rate of 10% over 2022-2025, accelerated by disciplined cost management to meet cost income ratio targets and flows into M&G's PruFund range.
Jefferies reiterates 'Buy' rating on M&G amid £1bn wholesale inflows
According to Sinclair, Barma and Kong, leverage concerns have «plagued» the stock since its listing in October 2019 after its demerger from
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