RBC Capital starts Liontrust at 'underperform', Polar Capital at 'outperform'

(Sharecast News) - RBC Capital Markets initiated coverage of Liontrust Asset Management on Friday with an 'underperform' rating and 390p price target as it took a look at the UK asset management sector.

"Our cautious outlook for LIO relates primarily to a protracted recovery in flows versus peers," it said. "This reflects weak absolute and relative performance in its key strategies."

Subsequently, RBC said its adjusted pre-tax profit forecasts are 0%/-4%/-5% below consensus over FY25-27.

"In addition, a further delay in flows recovery may necessitate a cut to dividend per share.

"Given these challenges, we see limited scope for its price-to-earnings valuation discount versus the peer group to close in the near-term, and we therefore initiate at underperform."

The bank also initiated coverage of Polar Capital Holdings, with an 'outperform' rating and 600p price target, calling it "a premium proposition".

"POLR is set for a return to net inflows, which should underpin above sector average growth, and also provides a catalyst for the shares to re-rate," RBC said.

"We anticipate enhanced client demand for its differentiated and well-performing investment propositions amid an improving UK retail environment through 2025."

The bank's adjusted pre-tax profits forecasts are 4%/5%/6% ahead of consensus for FY25-27, with its dividend per share growth rate also higher.

"The current 12-month forward P/E of 9.5x is a 21% discount to its historical average representing an attractive entry point," it said.