On Friday, JPMorgan made adjustments to its stance on Janus Henderson Group (NYSE:JHG), upgrading the investment firm's stock from Underweight to Neutral and increasing the price target to $31 from $28. The change in rating follows Janus Henderson's fourth-quarter earnings report, which exceeded expectations largely due to significant performance fees, gains beyond the primary business operations, and a lower tax rate.
Janus Henderson's adjusted earnings per share (EPS) for the fourth quarter of 2023 were reported at $0.82, surpassing the forecasted figures. However, the company is still experiencing overall net redemptions, with equity funds being the most affected. Multi-asset products also saw a decline in the quarter. Despite these challenges, fixed income flows provided some balance to the weaker areas, but total outflows reached $3.1 billion in the fourth quarter, marking the highest level of outflows since the same period in 2022.
The asset management firm reported exceptional performance fees in the fourth quarter, totaling $42 billion, primarily from hedge fund gains, which were a significant factor in the earnings beat. The company's management pointed to improved intermediary channel flows, which were flat in the fourth quarter compared to outflows of $1.3 billion in the third quarter of 2023, as a sign of progress under the new CEO Ali Dibadj's strategic vision.
The analyst from JPMorgan noted the success of a pair of active exchange-traded funds (ETFs) that are experiencing robust growth. This success, along with a commitment to share repurchases, is seen as a positive development that could lead to better performance for Janus Henderson's stock. Following the fourth-quarter earnings, JPMorgan has slightly adjusted its estimates and set a new price target for December 2024.
InvestingPro Insights
In light of JPMorgan's recent upgrade of Janus Henderson Group (NYSE:JHG), InvestingPro data and insights offer additional context for investors considering the firm's stock. With a market capitalization of $4.94 billion and a price-to-earnings (P/E) ratio standing at 14.77, Janus Henderson appears to be valued reasonably in the market. The adjusted P/E ratio for the last twelve months as of Q3 2023 is slightly higher at 14.96, reflecting modest changes in earnings expectations.
InvestingPro Tips suggest a mixed financial outlook for Janus Henderson. On the positive side, the company has raised its dividend for three consecutive years and maintains a healthy dividend yield of 5.19%, with the ex-date of its last dividend being November 10, 2023. Moreover, four analysts have revised their earnings upwards for the upcoming period, indicating a potential for earnings surprises. Additionally, Janus Henderson's cash flows are robust enough to cover its interest payments, and its liquid assets exceed short-term obligations, providing financial stability.
However, it is important to note that net income is expected to drop this year, and the stock price movements have been quite volatile. Despite these concerns, analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. The strong return over the last three months, with a 22.74% price total return, underscores the stock's recent performance momentum.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that could offer further insights into Janus Henderson's financial health and stock potential. Subscribers to InvestingPro can access these tips, and with the New Year sale, a subscription is currently available at up to a 50% discount. To enhance the offer, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
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