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On Wednesday, Deutsche Bank (ETR:DBKGn) analysts updated their valuation and forecasts for Abrdn Plc (ABDN:LN) (OTC: SLFPY), increasing the price target to GBP2.00 from the previous GBP1.90 while maintaining a Buy rating on the stock. The adjustment follows Abrdn’s recently announced financial year 2024 (FY24) results, the setting of new targets, and market assessments. The stock has shown strong momentum, gaining nearly 17% in the past week and 30% year-to-date. According to InvestingPro analysis, Abrdn currently appears undervalued based on its Fair Value assessment.
Analysts at Deutsche Bank have revised their forecasts to align with Abrdn’s goal of generating approximately £300 million in net capital by the financial year 2026 (FY26). The updated forecasts are in line with the company’s targets, predicting a net capital generation of £303 million. While analysts noted challenges in reaching the company’s earnings before interest and taxes (EBIT) target of over £300 million, estimating it at £259 million due to ongoing pressures in the asset management sector, the company maintains a strong financial position with a healthy gross profit margin of 95% and has consistently paid dividends for 19 consecutive years. InvestingPro data reveals 10+ additional insights about Abrdn’s financial health and future prospects.
Despite these pressures, Deutsche Bank’s forecasts are generally consistent with management’s expectations in most areas. The analysts believe that the difference between their EBIT forecast and Abrdn’s target could be addressed by the group’s effectiveness in resolving issues with smaller loss-making units, which may include their disposal or closure. These units are currently reported within the central division of the company.
The updated analysis and price target reflect Deutsche Bank’s response to Abrdn’s strategic plans and market positioning. The bank’s analysts have taken into account the company’s financial results and its ability to meet future capital generation goals, while also considering the potential impact of smaller, less profitable divisions on the company’s overall financial health.
In other recent news, Abrdn Plc has seen several developments concerning its financial projections and analyst evaluations. Morgan Stanley (NYSE:MS) has revised its price target for Abrdn, increasing it slightly from GBP1.47 to GBP1.49, while maintaining an Underweight stock rating. This adjustment follows Abrdn’s fourth-quarter trading update, which showed the company’s assets under management at £511 billion, marginally above expectations. Despite a less favorable sales mix with higher margin equity outflows, Morgan Stanley’s earnings per share estimate for 2024 remains unchanged.
However, the forecasts for 2025 and 2026 have been adjusted upwards due to stronger-than-expected customer growth in Abrdn’s Personal segment, with 32,000 net new clients added in 2024. This growth has led to an EPS increase of 1-2% for the years 2025 and 2026. The sum of parts-based valuation of Abrdn has also been increased by 1% to 149p, reflecting the company’s aggregated business segment values. These updates illustrate the balance between positive client growth and challenges in the sales mix.
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