T. Rowe Price stock slides after UBS downgrades to Sell on weak flow outlook

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• T. Rowe Price Group (NASDAQ:TROW) shares are drifting down 2.1% in early Monday morning trading after UBS analyst Brennan Hawken cut the asset manager to Sell from Neutral on the basis of a weak flow outlook driven by a slump in fund performance.
• Hawken also raised concerns about T. Rowe's (TROW) "lower expected fee adjusted organic growth," as the backdrop in growth equity turns negative, the analyst wrote in a note to clients.
• Overall, outflows are expected to accelerate at T. Rowe (TROW), "as the important three-year track record has deteriorated significantly this year" amid cyclical market depreciation, Hawken noted. In May, T. Rowe's (TROW) assets under management slid again to $1.40T, highlighted by a decline in AUM in its equity U.S. mutual funds.
• SA's Quant Rating, meanwhile, warned investors in March that T. Rowe (TROW) shares are at high risk of performing badly due to decelerating momentum and declining growth. TROW is off around 16% since that bearish call.
• Take a look at why SA contributor BeanKounter Capital believes T. Rowe is getting closer to a Strong Buy.

Comments

[Chris Lau]

$RY, a massive bank, lost ~ 6% in AUM. $TROW lost assets. $ARKK is getting inflow.
TROW looks good from here.

[dennis rfm]

Wonder how the UBS research list has done. The analysts don't care because no one pays any attention to them.

[carstenj]

Over 7% of oustanding stock short sold, just another analyst making shore when they cover they maximize their profits

[braticus]

Maybe sell when it was >200... Looking more like a buy now

[ndisang]

Hahaha...what do you expect of a money manager in a crash market?
Is there any money manager to whom this analysis won't apply?
Much ado about nothing.

[dgi123]

I'm very confused by the phrase "TROW is seeing outflows".

I think AUM is decreasing primarily because the markets are falling, not because of outflows? In Feb 28, TROW had AUM of 1.54 T
seekingalpha.com/...
In April 31, AUM was 1.42 T
seekingalpha.com/...

That's a decline of 7.8%. During that same time frame, SP500 fell by 10%. So it seems that TROW is still having some net inflows to counter the falling prices. I hypothesize that their EPS won't be that bad and long term, the company will still perform very well.

[KamilAgrawala]

@dgi123 Outflow for the last reported was $5.3 billion.

Here is an abstract from their report:

"Inflows of $6.7 billion to multi-asset, $5.3 billion to fixed income, and $0.8 billion to alternative products only partially offset the $18.1 billion of outflows from our equity strategies, resulting in net outflows of $5.3 billion for the quarter."

However you're correct in saying majority of their losses were due to a general decline in equities. About -$130.7 billion.

Source: troweprice.gcs-web.com/...

[Chris Lau]

@KamilAgrawala That is a sizable market loss.

[dgi123]

@KamilAgrawala If I understand your link, you're saying that TROW customers are selling and taking some money (~$5B) out of the market?

[midwestjim7]

Now I know what UBS stands for.

[Deep Value Ideas]

Great, thanks UBS - near $100, $TROW is a great buy - always focus on the long-term.

[LongTermPortfolio]

TROW's majority business is equity funds so AUM is very sensitive to a downturn. I'd say that TROW is highly leveraged to business cycles. The management is well aware of their cyclical business nature and always conservatively manages the business. They even added some PE business last December. TROW still has a number of funds remaining closed to new investors. I especially like New Horizon Fund. I have a sizable position built recently around 115. Good price to me. I am not greedy...

[gherbst2017]

Strange. UBS itself has a lot of TROW. What's going on there for a movie. Write down so that they can buy cheaper for big customers? Or write their own asset management in the basement?

[Lakeshow 2009]

I don't get it. Why all these articles are only focused on the near term and day trade type of investing. Now is the time to buy TROW to reap the benefits of dividends and growth for decades to come.

[BA Man]

Great time to be a buyer, which I will be this morning.

[Todd Kenyon, CFA]

Stock drops from 220 to 110 and NOW it's a sell. BRAVO! More crack Wall Street "anal-ysis". You all know what to do now, right?

[vtcomics]

@Todd Kenyon, CFA It's astonishing these dip shîts are allowed to retain their securities licenses with such absurd behavior

[CincinnatiRick]

Analyst way late again, as usual. This has been known and, arguably, priced in forever for any sentient being.