Morgan Stanley downgrades Standard Life to 'equal-weight'

Standard Life Aberdeen was downgraded to 'equal-weight' by analysts at Morgan Stanley on Thursday, stating that recent efforts by management to unlock further shareholder value had failed to drive the stock's performance.

Morgan Stanley said its previous 'overweight' rating was built on free optionality on flow turnaround and the potential for management action to unlock that very value.

Although the investment bank expects growth in the core 'Staberdeen' asset management unit in the long-term, it identified several challenges in the short-to-medium term given increased outflows from high-margin products and an overall deteriorating market environment.

"Whilst we believe management has improved shareholder value/returns, e.g. buybacks and debt reduction, this has not driven share price outperformance, as outflows from the core ASI business accelerated through 2H18," said MS.

"With limited visibility on flow/performance turnaround and potential disposal of listed stakes, and our new FY19-20 forecasts ~20% below consensus, the risk-reward no longer appears attractive."

MS also noted that a deteriorating macro environment was a "clearly negative" rick for asset managers moving forward.

Morgan Stanley dropped its target price on SLA from its previous 330p mark down to 255p per share.