Aberdeen Group Holds Steady But Cost Headwinds Keep Cavendish on the Sidelines

Cavendish maintained its Hold rating on Aberdeen Group (LON: ABDN) in a note on Tuesday, nudging its price target to 224 pence, as improved investment performance is largely offset by rising cost expectations and softer near-term fee income.

ABDN shares are up more than 12% this year, despite a 3.2% pullback over the last month. It is currently trading at 234p per share.

The firm’s analyst Jens Ehrenberg said the firm is “encouraged by the improved performances in some of the Group’s higher margin Investments strategies,” but flagged caution on the cost side as a key constraint on its outlook.

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The bank expects stronger emerging market and Asia-Pacific equity performance, alongside the anticipated contribution from Aberdeen’s Herald Investment Management acquisition, to support the Investments division’s top line and drive a mix shift toward higher-margin products. 

However, those gains are largely absorbed by higher operating expenditure assumptions, with Cavendish increasing its cost base estimates by 0.9% for FY26 and 0.3% in outer years.

Cavendish also flagged a “more realistic glide path” toward Aberdeen’s sub-0.18% cost-to-AuMA target within its interactive investor platform, adding further drag. Lower performance fees and carried interest in the first half compound the caution.

The net effect is seen as modest, with adjusted EPS estimates falling by around 0.1% across the FY26-28 forecast period, with the small top-line upgrade of 0.2% failing to fully compensate.

Cavendish said the adjustments reflect “minor forecast changes” rather than any material shift in the investment case, leaving the Hold stance intact.