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Investing.com - Morgan Stanley (NYSE:MS) upgraded Jupiter Fund Management Plc (LON:JUP) to “equal-weight” from “underweight” and raised its price target from 92p to 130p following the £100 million cash acquisition of CCLA Investment Management, in a note dated Friday.
The deal is expected to deliver earnings per share accretion of 18% by 2027 before synergies and over 40% after synergies, based on a run-rate operating profit of £11.4 million and £16 million in targeted cost savings, equivalent to roughly 30% of CCLA’s cost base.
Jupiter’s 2027 price-to-earnings ratio is projected to decline from 13.2x to 11x on a pre-synergy basis and 9x after synergies, against a sector average of 10–11x.
Post-synergy net income is forecast at £70.8 million, up from £50 million without the acquisition. Underlying EPS is expected to reach 13.2p by 2027, compared with 9.3p without the deal.
Assets under management are estimated to increase to £61 billion from a standalone estimate of £51.8 billion.
The acquisition enhances Jupiter’s scale in the U.K. market and expands its offerings in multi-asset and responsible investing.
CCLA holds a 10% share in the U.K. charity sector, with 56% of its assets in multi-asset strategies. The client bases of the two firms are non-overlapping, minimizing integration risks.
Revenue for 2027 is forecast at £334.8 million, compared to £316.8 million in 2025. Operating profit is expected to rise from £54.9 million in 2025 to £65.1 million in 2027. Forecast EPS is 8.0p for 2025 and 9.3p for 2027.
Dividend per share is projected to increase from 3.8p to 4.5p, with yield rising from 3.2% to 3.7% over the same period.
Jupiter continues to face structural industry pressures, including a shift in investor preference toward passive strategies.
Net new money saw a decline of 19.7% in 2024, and is expected to decrease by 1% in 2025, with a modest recovery anticipated in the following years.
Morgan Stanley adjusted its valuation to reflect the transaction and related restructuring.
Excess capital was revised to £130 million, accounting for £17 million in restructuring costs.
A 50% haircut was applied in line with sector norms. The target P/E multiple was raised from 9.5x to 13.5x, or 10x on a pro-forma basis.