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Top broker says Janus Henderson Group on cusp of a rally

This might be a good time to buy shares in asset manager Janus Henderson  or JANUS/IDR UNRESTR (ASX: JHG) if Morgan Stanley is to be believed as the broker is expecting the stock to outperform the market over the next two months heading into the February reporting season.

The share price of Janus Henderson eased 0.1% to $50.95 in late afternoon trade, but Morgan Stanley thinks there is a 70% to 80% chance that the stock will beat the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) in the next 60 days.

The cut in the US tax rate that’s spearheaded by US President Donald Trump and the robust performance of global equity markets are the key reasons behind the broker’s optimism towards the stock.

Morgan Stanley has recently upgraded its earnings forecast for Janus Henderson by more than 10%, which puts it at around 13% above consensus.

If the broker is right, we will see a raft of upgrades flow through in the coming weeks with the company expected to post its December 2017 quarterly result on February 6.

The broker is expecting a solid result with increasing operating margins, although some funds outflow is to be expected.

Morgan Stanley has an “overweight” recommendation on the stock with a price target of $64.50 a share.

However, Janus Henderson won’t be the only ones benefiting from rising global equity markets. Other listed wealth managers like AMP Limited (ASX: AMP) and IOOF Holdings Limited (ASX: IFL) should also have some positive noises to make when they turn in their results next month.

I am also expecting positive results from Macquarie Group Ltd (ASX: MQG).

Ironically, the Big Banks like Australia and New Zealand Banking Group (ASX: ANZ) may have chosen the wrong time to divest their wealth management businesses, particularly if markets remain well supported in 2018 as I am expecting.

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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited and Macquarie Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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