Jan 14 (Reuters) - Asset managers are likely to face significant near-term pressure primarily due to declining assets under management, amid deteriorating credit markets, a Barclays Capital analyst said and downgraded four U.S asset managers, including Blackstone (BX.N).
“We believe that long-term trends remain favorable, but the industry needs to work through significant near-term headwinds, which we believe will dominate the investment thesis for the time being,” analyst Roger Freeman said.
With assets under management declining, Freeman does not believe cost reductions will be able to fully offset the revenue shortfall for several asset managers.
“As a result we expect margins to decline meaningfully, similar to the 2000-2002 equity market downturn,” Freeman wrote in a note to clients.
The brokerage cut Blackstone (BX.N) to “underweight” from “overweight,” while it downgraded Fortress Investment Group (FIG.N), GLG Partners Inc GLG.N and Och-Ziff Capital Management (OZM.N) to “equal weight” from “overweight.”
Barclays Capital started coverage of BlackRock Inc (BLK.N) with an “overweight” rating and $127 price target, saying the company has a “dominant” fixed income platform, risk management advisory service and product offerings to benefit from the current environment. [ID:nWNAB9691]
“The stocks are trading well above the high end of their historical ranges and could come under pressure as estimates decline,” Freeman said.
Shares of Blackstone were trading down 5 percent at $5.80 before the bell. The stock had closed at $6.12 on Tuesday. (Reporting by Archana Shankar in Bangalore; Editing by Anil D‘Silva)