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On Tuesday, JPMorgan analyst Siddharth Parameswaran upgraded Perpetual Ltd (PPT:AU) (OTC:PRPLF) from Neutral to Overweight, adjusting the price target to AUD19.50 from the previous AUD17.00. The upgrade comes after a reassessment of the company’s earnings forecasts in light of recent market recoveries.
Parameswaran noted that the equity markets experienced a significant recovery from the lows seen in early April 2025, which were affected by tariff shocks. This recovery by the end of April largely reversed the capital gains downgrades that had been previously implemented. Perpetual Ltd, which has a high cost-to-income ratio of 73.4% as reported in the first half of 2025, shows a strong sensitivity to changes in funds under management (FUM) due to its financial leverage.
The analyst pointed out that every 1% change in FUM could impact the financial year 2026 underlying net profit after tax (UNPAT) by approximately 4.5%, assuming constant margins and product mix. Consequently, with market averages rising about 5.5% since the last update on April 15, 2025, there appears to be a 4.6% potential upside to Perpetual’s FUM assumptions.
Despite Perpetual’s share price already increasing around 10% during the same timeframe, JPMorgan sees an upside of approximately 18% to the implied earnings for the financial year 2026. The firm has therefore raised its FY26E earnings per share (EPS) estimate by 18.4%, reflecting the likelihood of earnings revisions for consensus.
This optimistic outlook is predicated on the performance of the markets as of May 9, 2025, and the subsequent implications for Perpetual Ltd’s financial positioning. The upgrade by JPMorgan is expected to influence market perceptions of Perpetual’s stock as the company heads into the next financial year with potentially revised earnings expectations.
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