CAY.L Share News (CAY)

(ShareCast News) - Cannacord Genuity lowered its target price on the shares of Charles Stanley and lowered its recommendation from 'buy' to 'hold' after the broker announced it would likely take between 12 to 18 months longer than originally anticipated (by the year to 31 March 2020) to reach its target of 15.0% for operating margins.In particular, analysts Salvatore Caruso, Bill Barnard and James Ash highlighted how resolving the issue of variable compensation for its investment managers still held the key to unlocking value.Nonetheless, they described Charles Stanley's 2016 results as "resilient" given the impact of market conditions on Funds Under Management and Administration, with profit before tax printing ahead of their estimates.Even so, the analysts pared their estimates for the firm on the back of the delay in reaching the 15% operating margin target and lower revenue yields.Their earnings per share estimates for 2017 and 2018 were cut to 11.7p and 21.6p, or by 40% and 28%, respectively.Canaccord also reduced its one-year forward multiple for Charles Stanley's shares from 17.5 to 13.0 to reflect slower profit growth. It was also a reflection of the risk factors specific to the broker.When combined with Canaccord's new estimate for fiscal year 2018 EPS of 21.6p, that multiple yielded the new 12-month target price of 280p (previously 340p).