Schroders: Weaker Short-Term Outlook Leads to 16% FVE Cut, but Long-Term Value Remains

We have updated our model to incorporate Schroders' recent first half of 2024 results. We now take a more bearish view of Schroders' short-term prospects. Fee margins and client flows will likely be weaker than we previously forecast. We cut our fair value estimate to GBP 4.20 per share from GBP 5.00 per share previously. However, we believe that Schroders has positioned itself well to benefit from longer-term trends. Apart from briefly during the pandemic, the shares have not traded at these levels in over a decade. We do not believe that its longer-term fundamentals have deteriorated to such an extent to justify a nearly 50% decline from its 2021 highs.