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After a shocking year of promotions Magellan Financial Group Ltd (ASX: MFG) are on the verge of falling even further.
The stock closed Friday’s session at $10.67, extending its year-to-date losses to 50% and 67% over the past year.
Therefore, Magellan failed to recover it pandemic losses and is now trading at its lowest level in nearly 10 years, as shown below.
Magellan’s performance against the benchmark is also shown S&P/ASX 200 Index (ASX: XJO) over the same time period.
Note in particular the difference in performance between Magellan and the benchmark since the start of the pandemic in February 2020.
Does Magellan have more downsides?
Magellan shares were initially rocked by the shock double departure of the company’s CEO Brett Cairns and then co-founder and director Hamish Douglas.
After a period of internal crisis, a new CEO and a new set of strategies, including a strategic review and planned repurchase of shares to support the share price.
Despite the efforts, monthly outflows from Magellan’s various investment vehicles have remained high over the past year.
In his own funds under management (FUM) update released yesterday.the group reported $3.2 billion in institutional outflows from August 31 to September 30, 2022.
One client only redeemed $1 billion in equity, the notes show. It was also accompanied by a $1.8 billion outflow of retail investment funds.
In fact, Douglas has even sold more than 760,000 of his Magellan shares by July 2022, according to a mandatory filing with the Australian Securities and Investments Commission (ASIC).
On top of that, the fund’s performance has been mixed, with the previously best infrastructure fund lagging its benchmark by 1.7% in September.
Staff at investment bank UBS are monitoring the fund’s numbers and believe there are more downsides to come.
UBS analysts led by Shreyas Patel lowered the broker’s price target by another 5% to $9.80, while reaffirming their sell rating on Magellan.
According to Patel, “Magellan’s core global business is at risk of being rebased [down] further’, despite the firm’s upcoming AGM in October.
UBS joins a number of other firms in their stance on Magellan, with 7 out of 10 brokers rating it a sell right now, while the remaining 3 say it’s a hold, according to Refinitiv Eikon data.
The following table summarizes analyst coverage and consensus price targets over the past 3 months with data provided by Refinitiv Eikon.
|Recommendation||July 7, 2022||August 7, 2022||September 7, 2022||Current|
|Target price||July 7, 2022||August 7, 2022||September 7, 2022||Current|
|Consensus||12.40 USD||$11.50 USD||$12.00 USD||US$10.90|
|Change from month to month||-7.2%||4.3%||-9.1%|
The current consensus price target from this list is $10.62, suggesting a bit more downside for Magellan stock.
Meanwhile, investors are patiently waiting for the firm’s AGM to be presented later this month. We’ll have to wait and see if this brings some form of retribution on the charts.