UPDATE 1-BofA cuts targets, Q1 EPS view for US asset managers
March 28 (Reuters) - Banc of America lowered its price targets and first-quarter earnings estimates for six U.S. asset managers, including BlackRock Inc (BLK.N: Cotización) and T. Rowe Price Group Inc (TROW.O: Cotización), citing declining equity markets.
So far in the first quarter, equity markets are down across the board with U.S. equity markets falling 9.5 percent, developed international equity markets 13.7 percent and emerging markets equities 16.0 percent, the brokerage said.
European equity capital markets faced their worst first quarter since 2005, with issuance in initial public offerings, follow-ons and convertible bonds totaling just $21 billion, down 65 percent from a year ago, according to Thomson data released on Friday.
BofA, which reduced its quarterly EPS estimates on the U.S. asset managers by an average of 6 percent, cut its price target on the shares of BlackRock to $228 from $230 and on T. Rowe to $48 from $51.
Equity-sensitive asset managers like Janus Capital Group Inc JNS.N, Franklin Resources (BEN.N: Cotización) and T. Rowe are most impacted in the group, BofA said and maintained a "neutral" rating on the stocks.
However, outlook for the group remains positive with organic growth rates of two to three times the industry levels, high margins and hints of consolidation warranting above-trend valuations, BofA wrote.
The brokerage said it continued to prefer companies such as Federated Investors Inc (FII.N: Cotización), BlackRock and Legg Mason Inc (LM.N: Cotización) which are more levered to money funds or long-term fixed income products.
BofA has "buy" ratings on BlackRock, Federated Investors and Legg Mason.
The following table lists the estimates and price target changes made by the brokerage on the companies: Company Name Price target Q1 EPS view 2008 EPS view Closing price New Old New Old New Old on March 27 BlackRock $228 $230 $2.05 $2.26 $9.32 $9.40 $202.52 Franklin Resources $116 $123 $1.73 $1.87 $7.46 $7.80 $99.46 Federated Investors $52 $53 $0.65 $0.66 $2.75 $2.77 $39.05 Janus Capital $27 $30 $0.27 $0.30 $1.21 $1.34 $23.23 Legg Mason $89 $91 $0.78 $0.80 $4.40 $4.42 $55.92 T. Rowe Price $48 $51 $0.58 $0.62 $2.39 $2.63 $50.26 (Reporting by Ramya Dilip in Bangalore; Editing by Himani Sarkar)
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