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Investing.com -- Barclays downgraded Ashmore Group to “underweight” from “equal weight,” citing a sharp re-rating that makes the stock appear fully valued despite improving conditions for emerging market investing, in a note dated Monday.
Shares of the asset management company were down 2.3% at 06:58 ET (10:58 GMT).
Ashmore shares have risen roughly 50% year-to-date, trading at a two-year forward P/E of about 23x, more than 50% above its longer-term average of roughly 15x, according to Barclays.
The brokerage said even under optimistic assumptions for net inflows, the current valuation is full relative to both the company’s history and its asset management peers.
For the first quarter of fiscal 2026, Ashmore is expected to report around 4% growth in assets under management to about £49 billion.
The increase comprises approximately 3% from positive market impact and 1% from net inflows, primarily driven by equity.
Barclays noted that these inflows would mark the first net inflows in more than four years, following 16 consecutive quarters of outflows.
Despite the higher AUM, Barclays lowered revenue and earnings forecasts, citing ongoing fee attrition, a higher variable compensation charge, lower cash balances, and lower interest rates.
The brokerage now projects a roughly 9-10% reduction in underlying pre-tax profit and EPS.
Barclays set a new price target of 150p, up from 145p, based on a 13x multiple of calendarized EPS for December 2026.
The multiple reflects the long-term sector average and the constructive market backdrop for emerging market assets, including dollar weakness and rate cuts in developed markets.
Ashmore’s share price has gained about 13% year-to-date, outpacing the FTSE 250, which is up around 7%. Barclays said the combination of a modest projected EPS CAGR of 4% for FY25-FY28 and the elevated valuation limits upside potential, leading to the downgrade.
Other European conventional asset managers remain selectively favored. Barclays continues to rate Man Group and Schroders “overweight,” citing strong EPS growth prospects and strategic execution.