Broker tips: Jupiter Fund Management, ITE

Berenberg has nudged down its expectations for Jupiter Fund Management's full-year earnings and reduced its price target on the stock.

Although Berenberg has retained its 'hold' recommendation, analyst Chris Turner said: "Recent strength in the group's European equity funds is encouraging, but will only drive an improvement in earnings once the group's Dynamic Bond Fund also stabilises."

Jupiter, which has around £50bn in assets under management, historically focused on selling equity funds to UK retail investors. In recent years, however, it has looked to diversify products and geography to become a broader-based European asset management group.

According to Berenberg, sales of the Dynamic Bond Fund "were particularly strong in 2017", accounting for around 20%-25% of assets under management at its peak, but "lacklustre performance and rotation away from fixed income has led to reversal in these flows."

Berenberg also pointed to Jupiter's "impressive equity performance", with the group's £2.6bn European Growth Fund outperforming by 15% over one year. It is expected to have a positive impact on revenue margins.

But Turner continued: "The strong performance of Jupiter's European funds may help stabilise the group's earnings from here, but this assumes the performance of the group's Dynamic Bond Fund does not deteriorate further. Despite the challenges facing Jupiter, the shares are not particularly cheap, especially given the negative earnings momentum."

Analysts at Canaccord Genuity dropped their target price on shares of events organiser ITE on Wednesday, noting that recent progress will likely be masked by the impact of the collapse in emerging markets FX.

Canaccord was encouraged by ITE's 2018 full-year revenues coming in "bang in line" with its forecasts, after a year of significant change. The broker also saw ITE's £300m acquisition of Ascential Events and a recent series of non-core disposals as being well timed.

While ITE has been aggressively reshaping its events portfolio, focusing on fewer, but higher margin/higher growth events, Canaccord said its larger Indian events will benefit from capacity increases in Delhi during 2020, but even this will come at the cost of a material reduction in 2019.

ITE cancelled 30 non-core events and 56 smaller events throughout the year, also dragging on 2019 profits.

With ITE finishing the year with a net debt of £83m, modestly below the broker's projected £86m, and also starting the year with a £113m worth of booked revenues, Canaccord said underlying forecasts looked "well underpinned", but warned that recent FX woes linked to Russia and Turkey had forced it to take another look at its estimates.

All in all, Canaccord lowered its target price on ITE from 95p to 77p but reiterated its 'hold' rating on the firm.