Peel Hunt reiterates Liontrust 'Buy' rating despite £1.6bn quarterly outflows
Liontrust’s current valuation 'does not reflect the strength of the core franchise and we believe there is re-rating potential when flows stabilise'.
In a research note, the investment bank said the company has been impacted by «difficult market conditions», which were exacerbated by the asset manager's reliance on UK retail clients. Peel Hunt analysts noted just under £1bn of total outflows for the quarter were attributed to the UK retail segment.
They said Liontrust's AUM performance «compares relatively unfavourably» to its peers for the three-month period, but they noted the firm was not a «stand out», especially when compared to Ashmore or Premier Miton, which posted AUM drops of 7.5% and 6.3%, respectively, for the third quarter of 2023.
Failed GAM bid 'will lead to restructuring' as Liontrust outflows mount
Liontrust's shares have fallen by around 77% since its highs in September 2021 and are down by 52% year-to-date, Peel Hunt said.
Currently, the asset manager's shares are trading on a ‘calendar year 2024 end' (CY24E) PE of around 7x and EV/EBIT of circa 5%, while yielding about 12%, they added.
As a result, «the business is clearly facing cyclical pressures», they argued, but in their view, Liontrust's current valuation «does not reflect the strength of the core franchise and we believe there is re-rating potential when flows stabilise».
Barclays has also kept its ‘Buy' rating for the asset manager.
Pantheon International completes £150m tender offer
Read more on investmentweek.co.uk
