Abrdn Share Price Forecast August 2021 – Time to Buy ABDN?

Shares of global life assurance business Abrdn (LSE: ABDN) are currently yielding 5% making them an enticing prospect for the average income-hungry investor. With a current P/E ratio of 8x, the shares are also so of the cheapest in the sector. While the income of the company is appealing, is it enough reason for investors to add ABDN shares to their portfolio?

Abrdn – Technical Analysis

Abrdn’s financial statement reveals a market cap of £6.371 billion with total assets worth £10.478 billion. The income statement reveals revenue of £1.75 billion for 2020 at a profit margin of 48.43%. This is a decrease from 2019’s revenue of £2.45 billion. At the time of writing (August 11^th  10:01 UTC+1), ABDN shares are valued at £289.7 with a downtrend of -0.38%.

Oscillators for Abrdn such as Stochastic %K (14, 3, 3)(63.7), Commodity Channel Index (20)(41.7),  Average Directional Index (14)(18.0) and Awesome Oscillator(12.6) are pointing towards a neutral action. On the other hand, moving averages such as Exponential Moving Average (100)(282.9), Simple Moving Average (100)(280.7),  Exponential Moving Average (200)(280.6) and Simple Moving Average (200)(285.4) are pointing towards a buy action.

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Recent Developments

Abrdn was first formed out of a merger between Aberdeen Asset Management and Standard Life back in 2017. Previously known as Standard Life Aberdeen, the company rebranded to Abrdn, which attracted a lot of criticism. The move was initiated by new CEO Stephen Bird who took over the role last September in an effort to improve the company’s focus and clarity. He is also selling non-core assets to simplify the business and implementing cost savings. He has also appointed a new management team to focus on the improvement and growth of each division.

ABDN shares experienced a 2% decrease after the company released its half-year results. Despite fee-based revenue increasing by 7% compared to last year, the company still suffered net outflows of £5.6 billion, compared to £24.8 billion in the previous year. Outflows have been a problem plaguing Abrdn since its merger. The company needs to convince clients that it is the best place to invest their money, which can only be done if they improve the investment performance of its products. With the industry being extremely competitive, Abrdn’s failure to achieve this will lead to their customers moving away.

The company recently announced the acquisition of AI-driven business Exo Investing to launch its own 24/7 wealth management app. Exo Investing was the pioneer of a fully automated wealth management platform. The deal, which was finalised on August 10^th, will involve Abrdn purchasing Exo Investing from Nucoro. Exo Investing’s existing technology allows users to built unique portfolios for themselves, based on their preferences, goals and risk profiles. According to Abrdn, Exo’s technology will complement its open banking insights, simple risk-rated savings, financial advice, digitally-driven wealth management and other existing vector capabilities.

Should You Buy ABDN Shares?

The most appealing aspect of ABDN to investors is its dividend. However, if the income isn’t covered by the company’s profits while still suffering from fund outflows, it can negatively impact future payments. Abrdn is focusing heavily on shareholders by building returns for them. However, its decision to rebase the annual dividend to 14.6 p isn’t sitting right with many investors. The company’s inventory should be on any investor’s watch list if they decide to pick up ABDN shares. The company wants to cut back fund outflows by repairing its funding efficiency. However, investors should wait for some concrete proof of this and not just pick up the shares only for the earnings.

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