Man Group (LON:EMG) has been downgraded to "neutral" from "overweight" rating by analysts at J.P. Morgan, following revisions to earnings projections due to persistent underperformance in its key trend-following strategies, in a note dated Monday.
Shares of the company, down about 23% year-to-date, have been impacted by a substantial decline in the AHL Alpha strategy, which has suffered from a weak performance over the last two years and further deterioration in April 2025.
While Man Group posted positive net flows in Q1, concerns about further redemptions later in the year led to a downward revision in the brokerage’s net flow forecast, with a modest outflow of -1% of AuM now expected in 2025.
This follows a period of negative returns from AHL Alpha, which was down 10% year-to-date by April 23, 2025, after two years of low returns, 1% in 2023 and 3% in 2024.
In response to these challenges, J.P. Morgan has lowered its EPS estimates, reducing the 2025 EPS by 30%, with similar reductions for the following years.
This brings the brokerage’s price target for Man Group down by 31%, to 167 pence from 242 pence per share.
Despite the lowered price target and the downgrade, Man’s valuation remains relatively low, with a 2026 price-to-earnings ratio of 7x compared to global peers at around 11x.
However, analysts remain cautious, noting that any upside will depend on a significant improvement in performance, which is unlikely in the near term given the continued challenges.
Key risks to the outlook include further deterioration in performance, which could lead to larger-than-expected outflows, and challenges in the broader market environment, which have made it difficult for trend-following strategies to perform well.
While Man Group’s shares have already absorbed much of the negative sentiment, analysts do not foresee a near-term recovery unless the performance of its AHL strategies improves.
