Despite major indices rallying to all-time highs. Shares in the managed funds business have struggled to outperform.
The post How did the Magellan (ASX:MFG) share price perform last reporting season? appeared first on The Motley Fool Australia. –
Shares in the managed funds business have struggled to deliver positive returns in the near term despite major indices such as the Dow Jones Industrial Average, S&P 500, Nasdaq Composite and ASX 200 surging to all-time highs in recent weeks.
With Magellan due to report on Tuesday, 17 August, could its previous February half-year results give investors any cues?
Magellan share price falls flat following half-year results
Unfortunately for Magellan, its half-year FY21 results would fail to inspire its underperforming share price.
For the six months ended 31 December, the company would report a 9% increase in average funds under management (FUM) to $100.9 billion.
In addition, the results would deliver a 3% decline in adjusted revenue and other income to $327.1 million and a 3% increase in net profit after tax to $202.3 million.
The slight decline in revenue was a result of a 70% decline in performance fees from $41.7 million to $12.4 million.
Management would advise that “performance fees can, and very often do, vary significantly from period to period”.
And that change in profit before tax and performance fees had actually increased 8% to $256.2 million, which was broadly in line with the growth in average FUM.
The relatively flat result would see the Magellan share price slide 4.42% to $48.85 on the day of the announcement.
What about its upcoming results?
Goldman Sachs has flagged the Magellan share price as a potential “negative surprise candidate”.
The broker flagged the company’s recent June quarter FUM update, citing “outflows of A$351mn were worse than expected and look soft relative to current Visible Alpha consensus estimates for FY22 inflows of c. A$1.6bn”.
Last year, Magellan announced that it had become a foundation investor in Barrenjoey Capital Partners, a newly established full-service financial services company.
Goldman said that “we feel consensus may be underestimating the early year drag associated with MFG’s investment in Barrenjoey”.
As a result, the broker retained a sell rating with a 12-month target price of $49.20.
With the Magellan share price closing at $51.40 last Friday, this represents a downside of 4.3%.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.