JPMorgan resumes coverage of Bridgepoint at ‘underweight’

JPMorgan Cazenove resumed its recommendation for Bridgepoint at ‘underweight’ on Thursday, with a 224p price target, as it pointed to long-term potential but limited near-term growth.

Previously, the bank had been ‘overweight’ the shares with a 440p price target.

"While we acknowledge the long-term growth potential from scaling up existing fund strategies and M&A, Bridgepoint’s current premium valuation is not justified by the near-term earnings growth profile, in our view, as we expect fee-related earnings (FRE) to decline by 1% between 2022-25 before the next flagship vintage Bridgepoint Europe VIII fees kick in in 2026," it said.

"This is also in the context of our cautious view on the private markets sector overall, particularly an expected slowdown in fundraising being reflected in slower fee growth and lower exits being reflected in lower carried interest revenues in the estimates across our coverage."

JPM said that given an accretive transaction is far from certain, and considering the fundraising headwinds it sees across the private markets sector and not just specific to Bridgepoint, it reckons the shares’ premium valuation is not justified, hence the relaunch at UW.