Schroders advanced as much as 4.2 percent to 2,247 pence, the biggest intraday gain in more than three months. The stock traded at 2,243 pence at 12:52 p.m., for a four-day gain of 9.1 percent, the biggest in as many days since February 2012.
“The downside risks to asset flows are decidedly limited by the company’s diversification and favorable market positioning,” Daniel Davies, an analyst at Exane BNP Paribas, said today in a note. He raised his recommendation to outperform from neutral and raised the price prediction to 2,500 pence from 2,150 pence.
Schroders is purchasing fund manager Cazenove Capital Holdings Ltd. to add 17.2 billion pounds ($26.2 billion) of assets, for a total of about 229.2 billion pounds of funds under management, it said in March. The London-based asset manager may produce some margin surprises in part because of the Cazenove acquisition, according to Davies.
Schroders has fallen about 13 percent since reaching a record high in May, when it reported first-quarter revenue and pretax profit that beat most analysts’ estimates as net inflows more than tripled to 5.6 billion pounds compared with a year earlier.
The Stoxx Europe 600 Financial Services Index has fallen about 8 percent in the past month as investors have pulled out of emerging markets, rattled by prospects for slower growth and the potential for the U.S. Federal Reserve to reduce stimulus measures.
An examination of Schroders’s exposure to potential asset allocation shifts shows that “the risks are skewed more favorably than for its peers,” Davies said.
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