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The Expert View: Tesco, Schroders and Next

by Chris Marshall on Jan 06, 2014 at 05:01

The Expert View: Tesco, Schroders and Next

Schroders upgraded as ‘Buxton headwind’ fades

Schroders (SDRt.L) is recovering from the departure of fund manager Richard Buxton, while boasting a strong balance sheet and fast projected earnings per share growth, said Barclays analysts as they upgraded the stock to ‘overweight’.

Buxton, previously Schroders’ head of UK equities and manager of the UK Alpha Fund , announced his departure from the firm in March, spurring outflows from the fund.

‘We believe the overall trend is of the fund being down to a stable core size with further net redemptions likely to be minimal’, the Barclays analysts said. ‘In addition, Schroders management highlight they have seen compensating strong inflows into Cazenove’s UK Opportunities fund , run by Julie Dean.’

Overall, they explained: ‘We rate Schroders OW due to its improving flow momentum now that the Buxton headwind is receding. The manager has attractive equity market gearing, with a impressive international distribution franchise and strong balance sheet.’

Alongside the upgrade from ‘underweight’, the analysts raised their target price to £30.10.

The Barclays team is ‘positive overall’ on the sector thanks to ‘improving flow momentum, Equity bias and attractive valuations,’ with Aberdeen (ADN.L) and Hargreaves Lansdown (HRGV.L) ‘key overweights’ alongside Schroders.

Schroders shares rose 1.1% on Friday, to close at £26.36.

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