Sector Snap: Asset Managers Fall

DES MOINES, Iowa (AP) — Shares of asset managers fell with the broader market Tuesday as analysts cut price targets and lowered earnings estimates. The downturn also reflected general market trends as major indices dropped about 3 percent.

Analysts at Morgan Stanley cut asset managers' earnings estimates by 10 percent to 13 percent on average, saying they expect weak first-quarter results across the group.

The analysts said shares in the asset managers have risen 62 percent from their March low, but are ahead of where they should be given first-quarter projections.

"We are cautious going into earnings following the strong run in the stocks," they said in a note. "Absent a sustained market rally, we see limited upside for the group from current levels and have lowered our 12-month price targets by 8 percent on average driven primarily by our reduced (earnings-per-share) estimates."

The analysts said visibility into asset managers' performance is poor, with revenue yields still contracting from shifts toward lower fee rate products.

The Morgan Stanley analysts said they looked at how the asset managers performed in six recent bear market rallies and the subsequent periods when equities rolled over. While asset managers outperformed on upswings, the outperformance started at much lower valuations.