Bell Potter sticks to ‘buy’ rating on Perpetual
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The news: Bell Potter analysts are sticking to a ‘buy’ rating on investment manager Perpetual as investors await a tax ruling on the demerger of some of its businesses.
The numbers: The brokerage also retained its 12-month price target of $24.76 on Perpetual.
Shares in the company are up 1.5% to $22.15 in early trading on the ASX.
The context: Perpetual agreed to sell its corporate trust and wealth management businesses to private equity giant KKR earlier this year, which would turn it into a pure play funds management business.
Bell Potter said an imminent tax ruling is likely to be positive, saying shareholders would accept the company’s stated range of $106 million to $227 million for the tax ruling. Even if the Australian Taxation Office pushes for more tax, Perpetual could retain the businesses since they are now likely to be worth more in a rising market, they added.
The company’s focus on cost reduction should also start to see forecasts rising, while the recent run up in prices since October highlight the upside from a small positive change in sentiment, the analysts said in a note.
The source: Bell Potter research
