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Jupiter rockets as broker turns positive after annual update

Numis upgraded Jupiter to an 'add' rating saying its full-year numbers removed uncertainty surrounding the business.

Jupiter rockets as broker turns positive after annual update

(Update) Shares in Jupiter have rocketed as the market welcomed its annual trading update. 

At 9am shares were up 9.6% to 371.2p

While the headline figure showed a net outflow of £4.6 billion for Jupiter in 2018,  Numis noted the results contained several bits of good news.

Numis analyst David McCann upgraded his rating on the stock from 'hold' to 'add', saying that a 'reasonable' amount of shorter term uncertainty surrounding the health of the firm had been removed. 

He noted that the revenue margin had held up better than expected, while he was also pleased to see the dividend payout ratio of 90% held firm, while surplus capital increased. 

'We feel that a reasonable amount of shorter term uncertainty
has been removed by today's update, McCann said. 

'However, we also note that short term flows remain unpredictable and we do not yet know in what direction new management might take the company over the medium-long term, hence we do not feel it is appropriate at this stage to upgrade to an "fully fledged" buy recommendation, but we have turned positive nonetheless.' 

Dynamic Bond outflows 

Jupiter's outflow was mainly down to a major shift in sentiment towards its Dynamic Bond fund. 

Managed by Ariel Bezalel, the fund accounted for £4.4 billion of the total outflow last year. In the previous five years it had drawn an inflow of £8.7 billion. 

'This reversal in flows came from a number of factors, but was
principally a result of short-term relative performance in the fund, allied to an industry-wide withdrawal from global fixed income products,' Jupiter told the market. 

The outflow was a factor behind the 15% dip in assets under management to £42.7 billion. Profit before tax decreased by £13.7 million to £179.2 million. 

The challenging year forced the group to cut its dividend payment by 13% to 28.5p per share. 

The results were the last before chief executive Maarten Slendebroek (pictured), who has led the business for five years, is replaced by Andrew Formica. 

Slendebroek drew comfort from the overall investment performance of the firm's fund managers in the tough conditions. 

'With market volatility continuing during the year, it was encouraging to see that our strategy of diversification underpinned solid business
performance for the period,' he said. 

'Most pleasing is that we delivered strong fund performance for our clients during the year with 77% of our mutual fund assets under management outperforming the median over three years.' 

With uncertainty expected to continue thus year, Slendebroek believes the business is in good shape for Formica to take command. 

'As I prepare to hand over the reins to my successor, I would like to say it has been a privilege to work at Jupiter alongside so many talented
colleagues.

'I leave Jupiter in good health and I wish my successor, our shareholders, clients and colleagues every success for the future.' 

 

 

 

 

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