Asia FX weakens slightly, rupee recovers from record low as RBI holds rates
Investing.com -- Jefferies has downgraded Aberdeen (LON:ABDN) to “hold” from “buy,” citing higher operational costs and limited near-term upside following a strong rally in the company’s share price.
The downgrade comes despite improved 2026 forecasts and an upward revision in the price target to 175p, from the previous 165p.
The brokerage’s adjusted EPS forecast for full-year 2025 was cut by 10%, primarily due to elevated costs.
While markets have rebounded since April, supporting assets under management and administration (AUMA), Jefferies noted that the modest gains in 2026 earnings projections are insufficient to justify a continued “buy” rating.
The adjusted operating margin forecast remains close to the company’s £300 million target, but analysts argue the stock’s valuation now reflects this outlook.
Aberdeen’s shares had risen 6% to 190p before the downgrade, outpacing sector fundamentals.
The asset management sector more broadly has seen a 22% increase in share prices over the past three months, while earnings estimates declined by 3%.
According to Jefferies, traditional asset managers are once again trading at approximately 11x forward earnings, making further re-rating unlikely without a material recovery in net flows, particularly from the retail segment, which remains weak.
Jefferies also updated its sum-of-the-parts (SOTP) valuation for Aberdeen. The 175p per share estimate includes a 10% haircut on its Phoenix stake, which is valued at £530 million, acknowledging Phoenix’s importance as a major customer. Surplus capital was assessed at £866 million, while Tier 1 and Tier 2 debt came to £807 million.
Operating businesses were valued using an 8x multiple for Investments and Adviser segments, both of which have faced outflows, and a 12.8x multiple for Interactive Investor, adjusted with a 20% discount.
Total (EPA:TTEF) operating business value reached £2.79 billion. After central and restructuring costs, the full valuation settled at £3.11 billion, or 175p per share.
Aberdeen’s 2025 adjusted EPS is projected at 11.75p, down from 13.20p, representing an 11% decline.
The 2026 estimate is marginally revised to 14.05p from 14p. The 2024 figure was unchanged at 15.02p. This results in a forward P/E of 16.2x for 2025, compared with 12.7x for 2024 and 13.5x for 2026.
Without a meaningful rebound in retail flows or further fundamental catalysts, Jefferies sees limited scope for continued outperformance in Aberdeen’s stock.