UPDATE: Citi Downgrades T. Rowe Price Group
In a report published Tuesday, Citi analyst Neil Stratton downgraded T. Rowe Price Group (NASDAQ: TROW) to Neutral from Buy, dropping its price target to $85.00 from $93.00.
According to the report, the downgrade represents recent fund closures and PM turnover are likely to temper flow recovery. 2014 is now seen as yet another tepid flow year for TROW, likely limiting price appreciation given already premium valuation, mixed margin dynamics and uneven capital management.
“On 1/16, the PM for TROW Growth Stock unexpectedly resigned,” the report noted. “This manager oversaw ~$52B in growth equity AUM, including ~$42B in mutual funds and ~$10B in other mandates. The announcement follows partial closures on New Horizons and Small Cap Stock, as well as PM changes in 2013 for Health Sciences and New America, casting uncertainty on nearly 20% of AUM and recent flow drivers. We do not see the same optical pressures akin to that recently experienced by IVZ but the incremental flow picture/recovery argument is now watered down and likely to temper upside, in our view.”
TROW closed Friday at $81.86.
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