The BT Investment Management Ltd (ASX: BTT) share price has been amongst the worst performers on the market today.
In morning trade the investment management company's shares are down over 6% to $11.57.
What happened?
As well as being caught up in a broad market sell-off, BTIM's share price decline is likely to be largely attributable to a broker downgrade this morning.
According to a research note out of UBS, its analysts have downgraded BT Investment Management to a sell rating from neutral.
Furthermore, the broker has cut its price target down to $11.15.
Analysts at the investment bank are not convinced that the company can live up to the market's expectations for performance fees.
As performance fees represent approximately 20% of pre-tax profits, UBS appears concerned that failure to live up to expectations could result in an earnings miss.
Should you buy the dip?
Whilst I am a big fan of the company, I'm not a buyer of its shares at the current price.
At 21x trailing earnings I feel its shares are a little on the expensive side. Especially given the risk of lower performance fees and the unknowns of the Brexit.
The majority of the company's revenue is generated in the United Kingdom from its JO Hambro business. Whilst this business is undoubtedly a star performer, I am concerned about the impact the Brexit will have on its funds under management and also the British pound.
In light of this, I would sooner invest in WAM Capital Limited (ASX: WAM) or WAM Active Limited (ASX: WAA) ahead of BT Investment Management.
