After losing its vowels Abrdn’s FTSE 100 status may be next

A year on from the asset manager’s eye-catching rebrand, Abrdn PLC’s blue-chip status hangs in the balance. After a 37 per cent drop in its share price this year the Edinburgh-based firm is set to be demoted from the FTSE 100 index at the latest quarterly review, according to indicative results announced by index compiler FTSE Russell on Tuesday evening.

A spokeswoman for Abrdn, formerly known as Standard Life Aberdeen, declined to comment.

While the asset management sector has been struck by recession fears, Credit Suisse analyst Haley Tam says Abrdn has suffered additionally from a lack of progress on a turnaround plan aimed at stemming fund outflows and cutting costs following the 2017 merger of Aberdeen Asset Management Plc and Standard Life Plc.

“There has been little sign of turnaround yet, and given the market environment that we’re in it’s an even bigger challenge for Abrdn to turn itself around now, Tam said by phone, explaining why she cut her rating on the stock to underperform in June. She is one of eight analysts among those tracked by Bloomberg that have a sell-equivalent recommendation, compared with only three buys and seven holds.

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The company warned on August 9th that its sales growth and cost targets would take longer to reach than previously expected, sending the stock down as much as 10 per cent on the day. According to Tam, there are also question marks over the £1.5-billion (€1.78bn) price paid for online trading firm Interactive Investor Ltd as the cost-of-living crisis hits the pockets of retail traders.

The final index review is due to be announced on August 31st, based on closing prices as of August 30th, and changes will become effective after the close on September 16th.

Generic drugmaker Hikma Pharmaceuticals Plc is also set to slip out of the FTSE 100, with medical-equipment maker ConvaTec Group Plc and F&C Investment Trust Plc likely to be promoted, according to Tuesday’s statement.

Changes to the benchmark can impact demand for a firm’s shares due to the prevalence of funds whose aim is to track the performance of the index. – Bloomberg