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On Monday, Goldman Sachs analyst Julian Braganza announced an upgrade of AMP (OTC:AMLTF) Ltd (AMP:AU) (OTC: AMLYY) stock from Neutral to Buy, setting a new price target of AUD1.40. The decision reflects a positive outlook on the company’s financial platforms and potential capital management strategies.
AMP has been experiencing stable positive net flows, including pension payments, within its Platforms division. While the company’s S&I segment still faces outflows, there are signs of improvement. Braganza pointed out several factors contributing to the upgraded rating, including the potential for AMP to capitalize on non-core equity stakes, Deferred Tax Assets (DTA) balance, and earnings from asset sales like the one involving Digital Bridge. These opportunities are not yet reflected in the firm’s Sum of the Parts (SOTP) valuation.
Additionally, AMP’s banking operations, despite structural challenges, could outperform peers in a lower interest rate environment. There is an opportunity for the bank to realize value, which may not have been fully appreciated in the market. Goldman Sachs also highlighted AMP’s ongoing cost reduction efforts and the company’s attractive valuation at approximately 10.5 times 1-year forward earnings, which is favorable compared to historical averages and the SOTP analysis.
The analyst acknowledged some risks to platform flows stemming from the potential sale of the advice business, noting that such impacts might take time to materialize, coupled with the current uncertainty in the markets.
Goldman Sachs’ new price target of AUD1.40 for AMP Ltd represents a significant endorsement of the company’s current strategy and future prospects, suggesting a period of potential growth and opportunity for the financial services firm.
In other recent news, AMP Ltd has experienced a series of significant developments. The company recently received an upgrade from JPMorgan, which raised its stock rating from Neutral to Overweight and set a new price target of AUD1.35. This decision followed AMP’s first-quarter update, which showed positive flow trends despite challenges in the investment markets. AMP Bank’s loan book remained stable, and while there was a slight decrease in Platform AUM, it was offset by better-than-expected flows. Additionally, UBS upgraded AMP’s stock rating from Sell to Neutral, adjusting the price target to AUD1.30. UBS highlighted signs of recovery in several business segments and noted the potential for upside if AMP successfully realizes its equity-accounted investments. Both analysts acknowledged AMP’s efforts to stabilize and improve its financial standing, with UBS particularly noting the company’s new financial disclosures. These recent assessments reflect a more balanced view of the risks and rewards associated with AMP’s stock.
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