Sept 10 (Reuters) - Goldman Sachs lowered its view on the U.S. asset management segment to “neutral” from “attractive,” saying a strong dollar, slowing global economy and rising competition from higher deposit rates will weigh on the sector.
“We believe that deteriorating international equity fund flows, increasing competition for investors’ dollar from bank depositories, and the general lack of market conviction will continue to pressure assets under management and earnings growth over the coming quarters,” analysts Marc Irizarry and Alexander Blostein wrote in a note to clients.
The analysts said the recent rise in deposit rates is contributing to the weakening fund flow, and it will be increasingly more difficult for managers with mediocre investment performance track record to bring in new money, while the best performers would continue to gain share.
Goldman downgraded Calamos Asset Management CLMS.O to “sell” from “neutral” and added it to its Americas conviction sell list. Calamos shares fell more than 10 percent.
The brokerage also downgraded Franklin Resources (BEN.N) to “neutral” from “buy”.
However, Goldman upgraded Eaton Vance (EV.N) to “buy” from “neutral” and added it to the brokerage’s conviction buy list, citing the company’s low international exposure and expected growth in assets under management.
Goldman retained its “buy” rating on Janus JNS.N but removed it from the conviction buy list.
The brokerage said BlackRock (BLK.N) remains its favourite diversified asset gatherer.
The analysts said the segment’s relative valuation is approaching the highest level since early 2006 and might be overdue for a correction.
The following table lists the brokerage’s price target changes and ratings on the stocks. COMPANY
RATING PRICE TARGET Prior Current AllianceBernstein (AB.N) Neutral
$54 Affiliated Managers (AMG.N) Buy
$103 Franklin Resources (BEN.N) Neutral
$104 BlackRock (BLK.N) Buy
$230 Calamos Asset Management CLMS.O Sell
$18 Eaton Vance (EV.N) Buy
$44 Gamco Investors (GBL.N) Sell
$41 Janus Capital JNS.N Buy
$32 Pzena Investment Management (PZN.N) Neutral
$10 T. Rowe Price (TROW.O) Neutral
$58 Waddell & Reed (WDR.N) Neutral
$30 (Reporting by Santosh Nadgir in Bangalore; Editing by Jarshad Kakkrakandy, Deepak Kannan)