Perpetual shares sink as UBS and Jarden cut price targets
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The news: Fund manager Perpetual was the worst performing ASX 200 stock following morning trade, after reporting a 4% drop in assets under management (AUM) and quarterly net outflows of $8.9 billion on Tuesday.
The numbers: Perpetual shares were down 6.3% to $16.10 at 12:30pm AEST, having closed 1.4% lower in the previous session.
Jarden kept its 'overweight' rating on Perpetual but trimmed its price target from $22.75 to $22.22. UBS remains 'neutral' rated on the stock but cut its price target from $19 to $18.50.
The context: Jarden analysts said that while Perpetual's AUM result was "slightly below" their expectations, net outflows "deteriorated materially" compared to the previous two quarters and relative to market estimates.
However, they noted that while net flows "appear challenging" in the near term, Perpetual still has "significant scope" for cost cuts beyond current plans.
UBS analysts said Perpetual's balance sheet pressures are increasing with the recent decline in equity markets and its continued net outflow trajectory.
What they said: "[...] the passage of time is leading to increasing revenue and cost pressures as value leakage materialises in asset management while divestment in its higher quality divisions are under way," UBS analysts said.
"This brings the balance sheet back in focus, where the dividend remains at risk the longer a deal takes to consummate."
The sources: Jarden research, UBS research
