Analyst cuts Franklin Resources on possible outflows

JPMorgan analyst Kenneth B. Worthington downgraded Franklin Resources to "Underweight" from "Neutral."

Worthington said it is likely more clients are taking money out than putting money in. Franklin Resources' top funds have been performing poorly, Worthington said, and the company may come under pressure because of key people leaving.

Franklin Resources' investments under management shrank slightly to $643.7 billion at the end of the first quarter. The company has attracted a lot of cash into money-market accounts, which are safe investments people have been flocking to for shelter from the credit crisis.

Excluding the money-market inflows, Worthington said the company's funds are probably suffering from net outflows.

Even though Franklin Resources' stock is cheap by many measures, Worthington said it could fall more.

Shares fell $1.70 to $100.56 in afternoon trading.