The abrdn share price has slumped since the start of the year following a run of disappointing earnings reports, resulting in its departure from the FTSE 100 index later this month. While the outlook appears gloomy, its recent acquisitions, including of a major online investing platform, could help the stock make a recovery.
Following a disappointing set of half-yearly earnings last month, abrdn [ABDN.L] is expected to be relegated from the FTSE 100. Since news of the demotion surfaced on 31 August, the Scottish money management firm’s share price has fallen to a fresh 52-week low.
The stock hit a low of 140.85p on 1 September before closing down 3.6%, though it has since reversed these losses to close at 153.65p on 7 September. However, year-to-date, the abrdn share price has fallen 30.9%, far underperforming the FTSE 100’s 1.9% decline over the same period.
abrdn due to enter FTSE 250 on 19 September
Abrdn, which was known as Standard Life until last year, manages £500bn of financial assets, but will be placed in the FTSE 250 mid-cap index at the start of trading on 19 September.
The stock’s struggles have meant it has become the 118th largest listed company in the UK, according to The Times. The relegation from the blue-chip index is a major blow to the investment firm, which had been a member of the FTSE 100 since Standard Life’s demutualisation 16 years ago. Aberdeen Asset Management, which Standard Life merged with in 2017, was also a FTSE 100 member between 2012 and 2016.
At the time of the merger, abrdn was valued at £11bn. This figure has since taken a plunge. Its market value stood at £3.2bn at the close on 7 September.
Other companies that will leave the FTSE 100 on 19 September include building trade supplier Howdens Joinery [HWDN.L] and Hikma Pharmaceuticals [HIK.L], while multi-manager F&C Investment Trust [FCIT.L], medical equipment firm ConvaTec [CTEC.L] and oil and gas company Harbour Energy [HBR.L] were all promoted to the index.
Weak earnings contribute to abrdn’s relegation
abrdn’s relegation from the benchmark index isn’t totally unexpected as there had been warning signs in recent years. The news comes on the heels of poor performance in its last set of earnings. On 9 August, the firm announced a £320m loss for the first half of 2022. Bloomberg data also shows that it lost almost £36bn in assets over the period.
CEO Stephen Bird admitted back in March that the company was unfocused. A number of key staff have left the firm, including former co-CEOs Martin Gilbert and Keith Skeoch. Even its rebranding as vowel-free abrdn in 2021, in an effort to portray a more contemporary image, attracted derision at the time.
However, if a couple of recent headline acquisitions for the firm pay off, its share price could yet recover. On 12 August, abrdn became the largest shareholder in digital securities exchange startup Archax, which gives investors access to blockchain-based assets. In May, it also closed a $1.5bn deal to snap up online investment platform interactive investor, the UK’s second-biggest funds supermarket, in a move seen by analysts as potentially critical for its future performance.
Analyst outlooks remain bearish
Could investors see the ABDN.L stock ticker back in the FTSE 100 again soon? Analyst sentiment appears gloomy. Back in July, Citibank downgraded its rating, recommending investors to ‘sell’ abrdn stock.
At the Financial Times, a consensus of 16 analysts rate the stock a ‘sell’, with two ‘buy’ ratings, six ‘hold’, six ‘underperform’ and two ‘sell’. The same sentiment is echoed at MarketBeat, where seven analysts give the stock a ‘reduce’ outlook based on four ‘sell’ and three ‘hold’ ratings.
Among 15 analysts offering 12-month price targets for abrdn, the stock has a median target of 175p, with a high estimate of 317p and a low estimate of 145p. The median estimate represents a 13.8% upside from the stock’s 7 September closing price, suggesting this could be an opportunity to buy the dip.
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