Ashmore shares outlook subdued as mark-to-market pressures weigh on growth prospects

On Wednesday, Jefferies analyst Laura Gris Trillo revised her stance on Ashmore Group (LON:ASHM:LN) (OTC: AJMPF), downgrading the investment manager's stock from Buy to Hold. The analyst also adjusted the price target to GBP1.70, a decrease from the previous GBP2.20 target.

The downgrade reflects concerns about the impact of geopolitical tensions and uncertainty about the Federal Reserve's interest rate cuts on emerging markets (EM). According to InvestingPro data, the stock is currently trading near its 52-week low, with a P/E ratio of 11.2x.

According to Trillo, Ashmore Group is expected to experience a decline in net new money (NNM), with an estimated outflow of $1.6 billion in the second quarter of fiscal year 2025, following a $0.7 billion outflow in the first quarter.

This forecast aligns with the broader trends in macro flows and is also influenced by negative mark-to-market valuations. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 10.68, indicating robust liquidity despite market challenges.

Despite the challenges, Trillo notes that Ashmore Group's recent share price decline is cushioned by fundamental factors. The company's excess capital, which represents 50% of its market capitalization, and its secure 10% dividend yield provide some support against further price drops. InvestingPro data reveals the company has maintained dividend payments for 18 consecutive years, demonstrating a strong commitment to shareholder returns.

The new price target of GBP1.70 by Jefferies suggests that the potential for upside is now limited, leading to the decision to downgrade the stock to a Hold rating. This adjustment comes amid a period of increased volatility for emerging markets, as investors weigh the implications of global economic policies and geopolitical risks.

For a complete analysis of Ashmore Group's valuation and 10 additional ProTips, visit InvestingPro.

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