RBS upgrades Schroders on diversification appeal and non-voting discount

(ShareCast News) - Schroders current share price offers an attractive entry point for investors, having dropped said RBC Capital Markets as it upgraded the asset manager to 'outperform'.Setting a price target of 3,100p that offers more than 25% upside, RBC said Schroders had the strongest balance sheet in the sector and ability to offer diversification that was cherished in these uncertain markets.Shcroders has good diversification across channels, with 57% institutional exposure and the rest in intermediary and wealth management; across region, with 41% UK, 21% Europe and Middle East, 25% AsiaPacific and 13% Americas; and across products, with 41% equities, 19% fixed income, 5% alternatives, 25% multiasset and 10% wealth management."Schroders trades at a rare discount to the asset managers peer group on an EV/EBITDA basisand at a slight premium on a cash-adjusted P/E basis," the bank said.Given the asset manager's diversification and financial strength, and with the shares having fallen from above £30 at the end of December to £25 earlier this week, analysts believe the company deserves a premium valuation to the sector."We see Schroders' current valuation as an attractive entry point in the historical context to gain exposure to the stock."Also, the non-voting shares (ticker: SDRC) are also attractive, on a wider-than-average 24% discount to the voters that could outweigh any liquidity concerns, versus an average discount of 21% over the last five years."We believe the current discount is too wide and that investors in the SDRC line could benefit from the discount tightening."