Pendal is now guiding to FY19 fixed cost growth of 6-8%. Morgan Stanley notes FY18 was a key year for investment which has positioned the business for future growth.
Despite market volatility, Morgan Stanley believes Pendal has more growth options than just navigating the issues facing active asset managers. The broker believes there is a US market opportunity as the company has a product range that avoids large-cap US equities and focuses on international equities, amid a planned sales expansion to cover the west coast market.
The US mutual funds base margins of 85 basis points are also the highest in the group. Morgan Stanley maintains an Overweight rating and reduces the target to $10.80 from $11.00. Industry view: In-Line.
Sector: Diversified Financials.
Target price is $10.80.Current Price is $8.50. Difference: $2.30 – (brackets indicate current price is over target). If PDL meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).