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T. Rowe Price (NASDAQ:TROW) and Invesco (NYSE:IVZ) were downgraded to Market Perform from Outperform by BMO Capital analyst James Fotheringham on Monday.
The analyst said the downgrades were inspired by an in-depth industry analysis.
Speaking on T. Rowe, Fotheringham also lowered the firm’s price target to $135 from $160, telling clients in a note that they see further downside to consensus, following the recent market depreciation, and the company’s valuation “now appears full on our lowered estimates.”
“Our upgrade (last year) was poorly timed,” acknowledged the analyst.
“Ytd market depreciation aside, we failed to anticipate the headwinds to TROW’s net flows and fund performance, inspired in part by the rotation from growth to value. In addition, we had anticipated greater flows traction from TROW’s large multi-asset product suite and Oak Hill Advisors acquisition.”
Regarding Invesco, the analyst provided a similar explanation, adding they have lowered estimates by as much as 17% and cut their target price to $20 from $25.
“In the absence of meaningful market appreciation, we believe expenses will prove sticky, pressuring EPS growth. We see much greater relative value among de-rated alternative asset managers (APO, KKR, and CG are our top picks,” wrote Fotheringham.
