Broker snap: Emerging markets key for Ashmore

21st Sep 2010 13:11

KBC Peel Hunt has shifted out of neutral and turned positive in its stance on fund manager Ashmore Group after upgrading its profit forecasts."We confirm that our June 2011 forecasts are upgraded by 12%, primarily due to higher performance fees. Fundamental drivers of the business continue to look positive and support our increased target price of 360p, with our recommendation subsequently moved to Buy," said Peel Hunt analyst Stuart Duncan.The previous price target was 320p.Based on its new forecast of earnings per share of 21.7p in 2011 the shares are trading on a price/earnings ratio of 14.8. The broker notes this is still at the top end of the range for the sector, but thinks this is justified based on the company's growing exposure to emerging market. "To us, Ashmore seems well positioned to take advantage of the increasing amount of assets being allocated to Emerging Market product. Investors are increasingly looking to diversify from Developed Economies and Ashmore has broadened its product range to offer clients more specific options. At the same time, more capital continues to be committed from within Emerging Markets, starting with sovereigns but this trend is expected to broaden to institutions," Duncan said. "By Ashmore's own analysis, they are only part of the way through the development of the business, giving considerable scope for future growth from a number of sources," the analyst added.