Morgan Stanley downgrades 3i Group after strong run

(Sharecast News) - Morgan Stanley downgraded 3i Group on Wednesday 'equalweight' from 'overweight' and cut the price target to 3,192p from 3,246p as it said the risk/reward is more balanced after a strong run.

The bank said 3i offers significant appeal, given the strong compounding characteristics at key asset Action. But with more than 10% upside to its price target after a strong sustained run - the shares are up 125% since start of 2023 - it is moving to 'equalweight'.

Morgan Stanley noted that 3i's valuation is close to the historical peak of around 1.4x P/NAV based on March 2024 NAV.

It said gearing to capital market recovery and a re-acceleration at Action are key to upside.

The bank said it was trimming its NAV estimates by around 2% for FY25-27 following the AGM statement, which indicated modest moderation in Action like-for-like growth.

At 0850 BST, the shares were down 1.5% at 3,000p.