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On Monday, JPMorgan analysts revised their stance on Man Group Plc (LON:EMG:LN) (OTC: MNGPY), downgrading the company’s stock rating from Overweight to Neutral. The firm also adjusted the price target to GBP 1.67, a decrease from the previous GBP 2.42. This change in rating reflects concerns over the performance of the company’s trend-following strategies, particularly AHL, and its ability to attract inflows.
The downgrade follows Man Group’s Q1 2025 assets under management (AuM) update, which showed decent net flows, but also revealed significant drawdowns in key AHL strategies since March. These recent developments have prompted JPMorgan to anticipate further double-digit earnings per share (EPS) estimate reductions. This follows a substantial ~40% cut in the firm’s 2025 EPS estimates during the first quarter.
JPMorgan’s analysts have expressed reduced confidence in Man Group’s near-term ability to draw inflows into their Absolute Return strategies due to the recent underperformance. The firm had previously believed that the deterioration in these strategies might be temporary and not significantly affect net outflows.
Despite the downgrade, JPMorgan noted the low headline valuation multiple for Man Group, which stands at 7x the 2026 estimated P/E based on revised estimates. The adjustment in rating and price target reflects a cautious outlook on the company’s short-term prospects in light of the challenges faced by its AHL strategies.
In other recent news, BofA Securities downgraded Man Group Plc’s stock rating from Buy to Neutral, adjusting the price target from GBP2.55 to GBP2.35. This decision follows Man Group’s fiscal year 2024 financial results, which exceeded expectations. BofA Securities anticipates a 38% decline in earnings per share (EPS) for 2025 due to weaker performance fees, largely attributed to negative returns in the company’s trend-following AHL funds. Analysts at BofA Securities have also revised their estimate for Man Group’s core profit before tax for 2025, placing it 38% below the company’s latest consensus. They project a normalization of performance fees by 2026, with a 3% fall in EPS for that year. Despite these adjustments, Man Group’s management fee profit before tax benefits from improved cost management. The company has also announced a $100 million share buyback program, which has been factored into BofA Securities’ estimates. BofA Securities notes that while the stock trades below its average, at 7 times projected 2026 earnings, there are limited immediate catalysts for a stock re-rating.
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