Magellan shares extend selloff as UBS flags outflows risk
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The news: Magellan Financial Group extended its recent selloff after the fund manager was hit by another downgrade following the exit of its long-serving head of investments and infrastructure lead Gerald Stack last week.
The numbers: Magellan shares were down 6.1% to $9.87 by 11:30am AEDT, making it the second worst performing stock across the ASX 200 index.
UBS downgraded Magellan from 'neutral' to 'sell' and cut its target price from $10.90 to $10.30. It also lowered its earnings-per-share forecasts by 2% in FY25 and 8% in FY26.
The company's share price has fallen more than 20% since news of Stack's departure on Thursday, with Jarden also downgrading its rating following the announcement.
The context: UBS analyst Shreyas Patel said that with Stack having led Magellan's listed infrastructure business for 18 years, a review by rating agencies and consultants will likely follow. This raises the risk of outflows near-term, said Patel, which is not uncommon with portfolio manager changes.
The departure marks the third key portfolio manager departure in recent years, following co-founder and chief investment officer Hamish Douglass in 2022 and Australian equities portfolio manager John Sevior in 2023.
The source: UBS research
