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Broker snap: FCAM divi cut to sour sentiment
Wed, 08 Feb, 2012
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Broker snap: FCAM divi cut to sour sentiment
Thu, 26 Aug 2010, 11:24:00
The halving of the interim dividend by fund manager <b>F&C Asset Management </b>caught the market on the hop, and is likely to sour sentiment in the short term, KBC Peel Hunt reckons. The broker is reviewing its target price and stock rating after underlying profit before tax and net outflows in the second quarter disappointed. "Assets under management as at 30 June stood at £95.3bn, a 6% reduction from 31 March (and compared to our expectation of £96.5bn), reflecting lower market levels and adverse foreign currency movements," KBC analyst Stuart Duncan observed. Adjusted profit before tax rose by 7% to £15.9m. KBC has not put the finishing touches to its new set of profit forecasts but Duncan said the full year profit before tax figures would probably be revised to somewhere around £50m, taking into account "current market and foreign exchange levels, as well as the contribution from Thames River Capital (which is expected to complete imminently)." "We expect our earnings per share (EPS) forecast to fall to c6.5p, taking into account the greater number of shares now in issue (we would expect a range of EPS numbers given the complexity in determining the appropriate number of shares to use post TRC acquisition)," the broker added. "We shall review our target price this morning to take account of the reduced dividend but are mindful of balancing this with Sherborne's intentions going forward," Duncan said, referring to Sherborne Investors, which bumped up its stake in F&C Asset Management on 18 August to 11%. "Sherborne's intentions are not yet clear but previous experience indicates an activist stance towards delivering increased value," Duncan suggests.
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