On Monday, RBC (TSX:RY) Capital Markets adjusted their outlook on Abrdn Plc (ABDN:LN) (OTC: SLFPY), raising the price target to GBP1.40 from GBP1.35. Despite the increase, the firm maintained its Underperform rating on the asset management company's shares.
The adjustment came after Abrdn reported first-quarter assets under management (AUM) of £507.7 billion, which was marginally above RBC Capital Markets' projections. This led to an upward revision of the adjusted operating profit forecast by an average of 2% for the fiscal years 2024 through 2026.
RBC Capital Markets noted that Abrdn's focus on emerging markets and Asia, especially within equities, where it holds 57% of its equity AUM as of December 31, 2023, is expected to continue affecting the fund's performance. According to the firm, 58% of Abrdn's AUM was underperforming its benchmark over a three-year period at the end of December 2023.
The firm also pointed out the challenges faced by Abrdn in terms of net flows. The company's strategic emphasis on specific geographic regions is seen as a contributing factor to the performance metrics which have implications for the fund's future growth.
The updated price target reflects a slight optimism based on recent AUM figures, yet RBC Capital Markets' stance remains cautious due to the underlying performance issues related to Abrdn's market focus. The Underperform rating indicates that the firm's analysts believe the stock will perform worse than the overall market or its sector within the next 12 months.
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