GQG shares extend gains despite cuts to price target
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The news: GQG Partners shares edged up on the ASX despite a spate of analysts revising down their price targets on the investment manager.
The numbers: GQG shares were up 1.36% to $2.24 by 2:36 after rallying 6.3% on Monday.
Analysts made the following revisions to their ratings, after the Florida-based firm shelved plans for a share buyback in the wake of a hit to the value of its investments in India’s Adani Group:
- Jarden kept its 'buy' rating but cut its target price from $3.30 to $3.15;
- Macquarie retained its 'outperform' rating but reduced its target price 5% from $3.15 to $3;
- Goldman Sachs maintained its 'buy' rating but lowered its price target from $3 to $2.80; and
- Morningstar reduced its fair value estimate from $2.55 to $2.45.
The context: Jarden analysts said that despite recording the lowest monthly inflows since 2022 in November, GQG has rebounded strongly since, with expectations that net inflows will continue to recover in December.
Macquarie analysts noted that net flows were still positive in November and the stock's valuation remains attractive.
Goldman Sachs analysts said its lower price target for GQG was due to the "relatively muted impact on flows to date despite an outsized share price reaction".
Morningstar equity analyst Shaun Ler noted that GQG's shares are down by around 16% since the company said it is reviewing its investments in Adani Group companies, whose executives were charged with alleged bribery.
GQG saw flat net flows in November, Ler said, "something rare in the firms history" and indicating some client redemptions.
What they said: "We anticipate elevated gross redemptions in the short term, driven by weaker near-term performance and some reputational setbacks," said Ler.
"However, these events are unlikely to impair GQG’s ability to gather new client funds."
The sources: Jarden research, Goldman Sachs research, Macquarie research, Morningstar research
