Pershing Square (PS) shares sank 12 percent after Bank of America downgraded Bill Ackman's asset manager to Underperform from Neutral and slashed its price target to $38 from $54—the stock's second downgrade in four days following Citi's Sell rating on Oct. 9.
BofA cut earnings per share estimates for 2026, 2027, and 2028, citing the delayed launch of the PSV fund as the primary driver. The firm also reduced its long-term return assumptions and lowered the valuation multiple applied to Pershing Square, pricing the stock in line with peer asset managers rather than at the growth premium it has commanded since its April IPO.
The PSH flagship fund declined 12.6 percent in the first half of 2026 while the S&P 500 rose 10.2 percent. Lower returns directly compress assets under management and reduce fee revenue. Citi, in its Oct. 9 note, cut its 2027 earnings per share estimate to $0.89 from $1.01—below consensus of $0.96—and flagged that performance fees will materialize later than previously projected.
Citi valued Pershing Square's existing funds at approximately $41 per share and assigned $9 per share for future launches. BofA's $38 target falls below even Citi's valuation for the current portfolio, signaling the market now demands concrete evidence of new fund success before granting a growth multiple.
Two catalysts could reset the outlook: execution on Howard Hughes Holdings' transformation into an insurance-focused business and a sustained improvement in Pershing Square's investment returns. Until PSV launches and the flagship fund consistently beats the market, the stock will trade on current fund performance alone.
