Schroders share price rises as UBS adds group to ‘Key Calls’ list

Schroders share price rises as UBS adds group to ‘Key Calls’ list
Written by:
Tsveta van Son
25th February 2016
Updated: 21st October 2019

Schroders’ (LON:SDR) share price has risen over three percent today after UBS added the blue-chip company to its ‘Key Calls’ list despite the headwinds facing UK asset managers, as bank’s analysts believe the stock is still currently undervalued.

The bank, which rates Schroders at ‘buy’ with a 2,800p price target, said that it expected the financial services firm to benefit from its well-diversified product mix, as well as its strong distribution channels in Europe, Asia and the US. UBS further revealed that its Evidence Lab survey of institutional investors showed Schroders’ exposure to equities and multi-asset-class products positioned it favourably to attract institutional investor flows this year.

UBS sees 400 basis points of EBITDA margin expansion through 2017 and argued that despite the difficult operating environment, Schroders should be able to improve EBITDA margins in the next two years to 42 percent from 38 percent currently. The bank reckoned that around 150 basis points would come from the company’s wealth management business and the rest from a mix shift among institutional clients into higher-margin products.
The upbeat comments have boosted Schroder’s share price. As of 14:15 GMT, the group was 3.11 percent better off at 2,550.00p, outperforming the broader UK stock market. The FTSE 100 benchmark index had meanwhile climbed 2.666 percent to stand at 6,023.35 points.
As of 14:37 GMT, Thursday, 25 February, Schroders plc share price is 2,550.50p.

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