Last Update 07 Dec 25

Fair value Increased 0.45%

SDR: Gradual Price Increases And Mixed Ratings Will Shape Medium-Term Outlook

The analyst price target for Schroders has been nudged higher, reflecting analysts' modest upward revisions to fair value and profit margin assumptions, supported by a series of recent target increases across the Street from roughly 340 to 420 GBp to about 360 to 435 GBp despite more cautious revenue growth and discount rate inputs.

Analyst Commentary

Recent Street research on Schroders presents a mixed picture, with price target revisions clustering in a moderately higher range and rating stances differing depending on views of growth durability, competitive pressures, and valuation.

Bullish Takeaways

Bullish analysts highlight the stock's recent weakness as creating a more attractive entry point. They argue that the current valuation does not fully reflect Schroders' long term earnings power.
Target increases toward the upper end of the 420 to 435 GBp range are described as reflecting resilient underlying profitability and the potential for margin improvement as cost initiatives gain traction.
JPMorgan's higher price targets, including the lift to 1,690 GBp on one Schroders line, are cited by bullish analysts as evidence that core franchise strength can support re rating as markets stabilise.
Analysts maintaining Buy ratings emphasise that, despite more conservative revenue assumptions, Schroders' diversified platform and capital position support upside to fair value over the medium term.

Bearish Takeaways

Bearish analysts maintain Underweight or Neutral views. They argue that even with higher price targets, the risk reward remains unappealing given muted net flow prospects and fee pressure across active management.
The decision by some to trim rather than raise targets, such as the small cut from 435 GBp to 430 GBp, underscores concern that execution on growth initiatives may fall short of earlier expectations.
There is caution that recent target hikes largely reflect market beta and lower risk free rates rather than a step change in Schroders specific growth, which in turn limits the scope for significant multiple expansion.
Hold and Neutral ratings signal ongoing scepticism that Schroders can consistently outgrow peers, with analysts pointing to a still challenging macro backdrop and ongoing structural shifts toward lower fee products.

What's in the News

JPMorgan raised its Schroders price target to 1,690 GBp from 1,670 GBp while maintaining a Neutral rating, reinforcing the higher end of Street valuation ranges (Periodicals).
Schroders is hosting an Analyst and Investor Day focused on showcasing its track record and the strengths of its four private markets pillars: Private Equity, Infrastructure, Real Estate, and Private Debt and Credit Alternatives (Key Developments).
Lloyds Banking Group is reportedly considering scrapping its wealth management tie up with Schroders and buying out Schroders 49.9 percent stake in Schroders Personal Wealth, which would give Lloyds full control of the unit and scope to expand its own wealth services (Key Developments).

Valuation Changes

The fair value estimate has risen slightly to 4.15 times earnings, up from about 4.13 times, reflecting modestly higher long-term earnings assumptions.
The discount rate has increased slightly to roughly 8.63 percent from about 8.52 percent, signalling a marginally higher hurdle rate applied to future cash flows.
The revenue growth forecast has edged lower to about minus 3.31 percent from minus 3.27 percent, indicating a slightly more cautious view on top-line trends.
The net profit margin expectation has improved marginally to about 23.25 percent from 23.19 percent, suggesting a small anticipated uplift in profitability.
The future P/E multiple has moved up fractionally to around 13.41 times from 13.33 times, pointing to a modestly higher valuation being assigned to projected earnings.

Strength in sustainability, ESG, and private assets positions the company to benefit from long-term shifts in global investment and retirement savings trends.
Cost reduction, operational efficiencies, and strategic investments drive improved margins and enable above-market growth in targeted global regions and product segments.
Shifting investor preferences, regulatory and tech pressures, and restructuring challenges are converging to threaten Schroders' core business, margins, and revenue stability.

Catalysts

About Schroders

A publicly owned investment manager.What are the underlying business or industry changes driving this perspective?

Schroders' ongoing investment and innovation in sustainability and ESG-focused strategies is winning major new mandates and positions the firm to capture increasing flows as global investors and pension schemes shift capital towards responsible investment solutions-supporting future revenue and long-term fee growth.
The growing global focus on retirement savings and pension reform (e.g., UK LTAFs, auto-enrollment, tax incentivization) is expanding the investable universe for private assets and wealth management, where Schroders has a strong offering, translating into higher and more stable AUM, and enhancing recurring revenue streams.
Expansion in private assets and alternatives (infrastructure debt funds, private equity, hybrid LTAF/ELTIF products) leverages structural market trends for higher-margin, less cyclical revenue, supporting steady earnings and improved net operating margins over time.
The group's disciplined transformation program-including portfolio simplification, operating model efficiencies, and cost reduction initiatives-has already reduced expenses, with a clear trajectory to further improve the cost-to-income ratio, directly boosting net margins and operating leverage.
Investment in talent, technology, and strategic partnerships (especially to scale in high-growth regions and product areas like Asia, North America, and adviser networks) enhances Schroders' ability to capture secular growth in global wealth and generate above-market revenue growth through both organic and inorganic expansion.

Schroders Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Schroders's revenue will decrease by 6.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 11.6% today to 24.8% in 3 years time.
Analysts expect earnings to reach £631.5 million (and earnings per share of £0.36) by about September 2028, up from £358.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.0x on those 2028 earnings, down from 16.0x today. This future PE is greater than the current PE for the GB Capital Markets industry at 12.6x.
Analysts expect the number of shares outstanding to grow by 0.97% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.44%, as per the Simply Wall St company report.

Schroders Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Schroders' heavy emphasis on active management could be vulnerable to the long-term trend of increasing demand for passive investing and ETFs, which may erode its core business models, leading to pressure on both revenue and margins.
The transformation program involves significant restructuring costs and continued portfolio rationalization, indicating execution risk; failure to successfully realize planned efficiencies or disruption from ongoing changes could undermine earnings and cost savings targets.
The company's net operating revenue margins in several segments are under pressure, notably within public markets and core solutions, pointing to potential long-term fee compression and changing client appetites that could weigh on revenue growth and profitability.
A high proportion (about two thirds) of revenues and AUM are generated in non-sterling currencies, exposing financials to ongoing FX volatility, which may materially impact revenues and earnings from one period to the next.
Sustained industry-wide pressures-such as regulatory changes (e.g., Basel 3.1), the rise of fintech and "robo-advisors," and the need for ongoing ESG transparency-could increase compliance and tech-related costs, as well as heighten competition, ultimately affecting net margins and market share.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £3.975 for Schroders based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £4.75, and the most bearish reporting a price target of just £3.26.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £2.5 billion, earnings will come to £631.5 million, and it would be trading on a PE ratio of 13.0x, assuming you use a discount rate of 8.4%.
Given the current share price of £3.65, the analyst price target of £3.97 is 8.2% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise Schroders Price Target Amid Improved Margins and Cautious Risk Outlook