Shares in Pinnacle Investment Management Group Ltd (ASX: PNI) are trading not far off their 12-month lows, with at least one broker tipping there's plenty of share price upside to be had from here.
Canaccord Genuity has issued a research note to its clients recently, with a very bullish price target on the funds manager, which we'll get to shortly.
Firstly, what does the company do?
Pinnacle offers the ability to invest in products offered by a range of different "affiliates" – themselves major fund managers and investors – with both retail and wholesale investors catered for.
Image source: Getty Images
Strong capital flows
In its most recent half-year results, Pinnacle said it had experienced record net inflows of $17.2 billion, with $6.8 billion in retail inflows, $7 billion in institutional, and $3.4 billion in international inflows.
Pinnacle Chair, Alan Watson, said of the results:
Our broad platform of Affiliates and strategies, together with increasing presence in much larger addressable end markets, has underpinned a strong net flow outcome for the half, which will drive revenue growth in future periods. It is pleasing that all existing Affiliates are profitable with revenues and core earnings continuing to build. Finally, we are delighted to welcome our nineteenth Affiliate, Advantage Partners of Japan, and today announce further investment into Pacific Asset Management. We are confident that both of these growth initiatives will be to the benefit of our clients, people and shareholders.
Pinnacle's first-half net profit was $67.3 million, down 11% on the previous corresponding period, and the company said it had about $110 million of "dry powder" available to invest at the end of the half.
In its research note to its clients, Canaccord said it has its eye on one Pinnacle affiliate in particular in Metrics, which gives investors exposure to Australian corporate loans.
As they said:
We believe FY26 will be the breakout year for Metrics following the ingestion and optimisation of several acquisitions that should finally begin to yield fruit. Performance is tracking well across all major Metrics' funds financial year to date with asset under management holding steady since the December half, highlighting that despite fears of an en-masse redemption wave and liquidity shortfall, the numbers don't currently support this but will be a watching brief with the detailed disclosures provided by Metrics at the fund/trust level highlighting a position of significant strength.
Shares looking cheap
Canaccord has a price target of $24.53 on Pinnacle shares, down from $27.22, but still well above the current price of $13.56.
Pinnacle was removed from the S&P/ASX 100 Index (ASX: XTO) in the most recent rebalance, which became effective on March 23.
Pinnacle was valued at $3.17 billion at the close of trade on Monday.
