BalkansCat
Franklin Resources (NYSE:BEN) stock has slipped 0.7% after BofA Securities analyst Craig Siegenthaler downgraded the asset manager to Underperform from Neutral due to expected sizeable net redemptions while excess capital is mostly depleted.
Investment performance of its active funds are underperforming, net flows have deteriorated for two straight quarter and is expected to be about -$20B next quarter, and its excess capital is near zero after its recent M&A spree, Siegenthaler said.
He pointed out that Franklin Resource’s (BEN) Western Asset Core is ranking in the 98th/85th percentile over 1/3Y, while Wester Asset Core Plus Fund is ranking 99th/92nd percentile and the Templeton Global Bond Fund underperformed for three years straight.
“While we expect Western’s flagship strategies to outperform in a recovery, poor investment performance in 2022 could impact its ability to wine new business due to revised consultant recommendations,” the analyst wrote in a note to clients.
In the past year, BEN’s 17% stock decline is steeper than the S&P 500’s 11% drop, but it has fared better than peers T. Rowe Price (TROW), -44%, and BlackRock (BLK), -26%, during the same period.
In August, SA contributor Intrinsic Analysis downgraded Franklin Resources (BEN) to Hold on reduced confidence in valuation