'Risk-Reward Increasingly Unfavourable': Citi cuts Vontobel to 'sell'

Vontobel Holding AG

10/11/2023 11:38

** Citi cuts its rating on Vontobel  VONN.S  to "sell" from
"neutral", saying the company's profitability is at the lower
end of its coverage among European asset and wealth managers 
    ** Q3 results "were even weaker than we had anticipated,"
Citi says, pointing to misses in flow and assets under
management (AUM)
    ** The broker assumes Vontobel's reiterated cost-income
target of less than 72% is now medium-term, "as 2024 would be
highly challenging,"
    ** Vontobel needs higher flows, revenues, and earnings
growth than is now forecast by consensus to justify its
multiple, Citi adds 
    ** Though shares may not be expensive historically and
relative to the Swiss market index  .SSMI , "we find on a
mix-adjusted basis Vontobel trades one standard deviation above
the c10.5x what one would expect" - Citi
    ** Vontobel performs poorly against Swiss and European peers
in terms of important 3-year and 5-year metrics (e.g., UBS, EMG,
SDR), especially in high-margin stocks, Citi says
    **  This is why the company may face obstacle while
improving flows even in a cyclical recovery, it adds


 (Reporting by Mateusz Dobrzyniewski)
 ((Mateusz.dobrzyniewski@thomsonreuters.com))