Arguing that the valuations of publicly traded money managers reflect overly optimistic assumptions about the stock market, Prudential lowered its second-quarter estimates on several big names in the sector Monday.

Prudential lowered its quarterly earnings estimates on

Affiliated Managers

(AMG) - Get Report

to $1.08 per share from $1.11;

Alliance Capital

(AC) - Get Report

to 59 cents a s share from 65 cents;

T. Rowe Price

(TROW) - Get Report

to 41 cents a share from 44 cents; and

Waddell & Reed

(WDR) - Get Report

(WDR:NYSE) to 29 cents a share from 35 cents.

According to Prudential, the fall in the

S&P 500

implies that overall assets under management are down 3.3% compared with the previous quarter. "

Second-quarter consensus numbers for asset managers seem to contemplate sequentially higher earnings in the second quarter. For this to occur, there needs to be a sustained recovery in June of more than 10%, a scenario we view as unlikely," Prudential analysts John Hall and Robert Smith said in a report.

As a result, prices in the group are too high, they argued. "The typical assumption embedded in asset management EPS forecasts would be an increase in the equity market of roughly 2%. We view this outcome as unlikely," Hall and Smith said.

Shares in all four asset managers were down this morning.