The asset manager had an eventful 2014, as traders were spooked by the weakness in emerging market economies, but the outflow of funds was offset by the acquisition of new clients from the Scottish Widows Investment Partnership takeover.
There was an exodus from emerging market investments last year as the US wound down the quantitative easing scheme. That rattled the higher risk funds that were exposed to those economies. Ashore – who are more emerging markets focused – encountered a much better withdrawal of funds, which was reflected in its share price too.
While Aberdeen Asset Management has exposure to such high-risk countries, it’s relatively small compared with the remainder of the group. The latest Federal Reserve update was very vague as to when rates will rise, and some traders are looking to September for a hike. This stability in the financial markets will assist Aberdeen Asset Management in the near-term.
Assets under management increased by 62% to £324 billion, but that was largely attributed to the takeover of Scottish Widows for £660 million. The deal made Aberdeen Asset Management the biggest listed fund manager in Europe by assets under management. Even though the company was rattled by the outflow of funds from the emerging markets division, full-year revenue and profit increased by 4% and 2% respectively.
When Aberdeen Asset Management reveals its first-half figures, the consensus is for revenue of £619 million and adjusted net-income of £229 million. This compares with the second-half figures – when revenue was £614 million and adjusted net income was £221 million. The asset manager will post its full-year numbers, and traders are anticipating revenue of £1.25 billion and adjusted net income of £447 million, and these forecasts represent a 14.6% rise in revenue and a 15% increase in adjusted net income.
Equity analysts are bullish on Aberdeen Asset Management, and out of the 23 recommendations, nine are buys, ten are holds, and four are sells. The average target price is £4.84 which is marginally above the current price. Investment banks are more bullish on Schroders, and out of the 23 ratings, 13 are buys, and ten are holds. The average target price is £33.70, which is 4.4% above the current price.
The share price has recovered from the sell-off in December when the full-year figures were revealed. The stock is receiving support from the 460p area, and if that is held it will bring the resistance at 480p in to play, and beyond that traders will look to £5. A drop below 460p, and the stock will find itself in the 440p region – which coincides with the 200-day moving average, and if that mark is punctured, the stock will find support at 420 and 400p respectively.