Polar Capital has been downgraded by two different City analysts after its assets fell significantly more than had been expected by forecasts.
The tech-focused asset manager lost £2.4bn over the last quarter almost entirely due to £2.3bn of losses in investment returns, as US tech giants have struggled to match the stock price returns of previous years.
This 10 per cent drop in assets was unexpected, as analysts had been expecting a slight uptick across the quarter, leading brokers to downgrade Polar’s stock.
Peel Hunt slashed the stock’s target price from 665p to 475p, though kept it as a Buy, while Panmure Liberum downgraded it from 600p to 500p.
Panmure analysts also warned there were “looming questions about not just 2026’s dividend but, perhaps, also the final payment for 2025” if the firm is unable to reverse the damage from tech’s poor performance so far this year.
Polar’s 46p dividend was established in 2022 when the company was bringing in £69m in profit, but this has since fallen to around £53m, leaving “recurring questions” around its viability, the analysts explained.
“Flagging a possible, even probable, cut for 2026 is easily justifiable given current market circumstances, but the question of whether to pay in full for 2025 very finely balanced,” added the Panmure analysts.
Meanwhile, Investec analysts kept their buy rating for the firm’s stock, but said they expected “challenging macro-economic backdrop, as well as elevated levels of volatility to remain a near-term headwind for Polar”.
After remaining one of the strongest asset managers at retaining client money in the last few years, Polar stumbled in the last half of 2024, with investors pulling £172m and £260m in the third and fourth quarter respectively.
In the first quarter of this year, only £89m was pulled from its coffers, though this was still more than the £62m that had been expected by the market, largely due to £200m in outflows from its global tech fund.
“While volatile equity markets may impact assets under management levels and profitability in the near term, we remain confident that with our diverse range of specialist active fund strategies, we are well-positioned to perform for our clients and shareholders over the long term,” said Polar Capital boss Gavin Rochussen.
