Schroders shares (LON: SDR) have once again broken the 385p level, as a healthy price target raise indicates further upside may be in store. The company, one of the UK’s leading asset management firms, has seen RBC Capital raise its price target from 390p to 435p, while maintaining an Outperform rating.
The cost-saving initiatives, targeting £150 million in savings by 2027, has been a key driver of RBC’s optimistic outlook. The firm anticipates that the effective implementation of these efficiencies will offset anticipated revenue cuts in Public Markets. Indeed, RBC analysts have adjusted their adjusted operating earnings estimates upward, reflecting the positive impact of these cost-saving measures.
Technically, Schroders’ stock is exhibiting strong breakout characteristics. The recent price action has propelled the stock above its recent consolidation range and across several moving averages, signaling a shift in momentum. While the Relative Strength Index (RSI) of 51.15 suggests neutral momentum, the overall trend points towards continued upward movement, with the shares having added 19% since the start of the year, and 6% in the past five trading sessions.
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From a valuation perspective, Schroders currently trades at a trailing twelve-month (TTM) price-to-earnings (PE) ratio of 14.8, with a forward PE of 12.77. The company also offers a dividend yield of 5.6%, translating to an annual dividend of 0.22 GBp per share.
Whilst sentiment is strong, the cost-cutting measures, if delayed or fails in implementation could negatively impact earnings.
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