Asset manager T. Rowe Price Inc (TROW.O) said on Wednesday first-quarter profit jumped 22.5 percent as rising markets helped bring in more investment advisory fees, but concern over withdrawals by institutional investors sent its shares tumbling.
The Baltimore company reported a net inflow of cash for the quarter of $3.3 billion, including inflows of $7.6 billion to its mutual funds. But institutional investors withdrew a net $4.3 billion.
T. Rowe Price shares were down 4 percent to $73.19 in morning trading.
The outflows "Cloud Otherwise Strong Story," Nomura analyst Glenn Schorr titled a note to clients. Schorr maintained his "neutral" rating on the stock, partly because it trades at a higher valuation than peers. T. Rowe Price has benefited from strong-performing funds and a growing retirement business.
Assets under management at March 31 were $617.4 billion, up from $576.8 billion at the end of December. Market appreciation added $37.3 billion to the total.
The institutional outflows were tied mainly to non-U.S. clients who changed their investment objectives, the company said.
In an interview, T. Rowe Price Chief Executive James Kennedy acknowledged the institutional outflows but said the firm's mutual fund flows were among the highest in memory. "Performance is bringing in the money," he said.
Rising markets have also kindled investor interest in equities, Kennedy said, though he cautioned that stock markets are unlikely to keep rising at the first quarter's fast pace.
T. Rowe Price reported net income of $241.9 million, or 91 cents per share, up from $197.5 million, or 75 cents per share, a year earlier.
Wall Street analysts on average had expected 89 cents per share, according to Thomson Reuters I/B/E/S.
(Reporting by Ross Kerber; Editing by Gerald E. McCormick and John Wallace)