February 23, 2009 / 1:11 PM / 10 years ago

UPDATE 1-RESEARCH ALERT-Friedman cuts Janus Capital target

Feb 23 (Reuters) - Friedman, Billings, Ramsay cut its price target on shares of Janus Capital JNS.N, and lowered its earnings estimates on several other U.S. asset managers, saying challenging equity markets and client outflows continue to hurt many of them.

The brokerage cut its price target on Janus’s stock by $1.00 to $5.50 to reflect lower earnings estimates partly due to the company’s equity-focused products and its inability to capitalize on asset flows.

Friedman analyst Matt Snowling said in a note to clients that his 2009 estimates for the U.S. asset mangers reflect an average annual decline of 36.4 percent in earnings for these firms, with the sharpest declines expected at Janus and T. Rowe Price (TROW.O). He expects earnings at these two firms to almost halve this year.

The analyst said he remains cautious on the group, as many managers will struggle to align costs with lower revenues, while the risks of further investor withdrawals would dissuade retail investors from increasing their market exposure.

The following table summarizes the earnings-per-share estimate changes:

Company Estimate Changes

Q1 2009

New Old New Old Federated Investors (FII.N) $0.49 $0.49 $2.02 $2.04 Franklin Resources (BEN.N) $0.72 $0.73 $3.15 $3.17 Janus Capital JNS.N $0.08 $0.08 $0.36 $0.47 Legg Mason (LM.N) $0.30 $0.30 $1.16 $1.18 T. Rowe Price (TROW.O) $0.17 $0.18 $0.98 $1.07 Waddell & Reed (WDR.N) $0.19 $0.19 $0.95 $1.02 (Reporting by Adheesha Sarkar in Bangalore; Editing by Pratish Narayanan)

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