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Investing.com - Goldman Sachs upgraded Franklin Resources (NYSE:BEN) from Neutral to Buy on Thursday, setting a price target of $29.00 that represents over 25% upside potential from current levels. According to InvestingPro data, Franklin Resources has demonstrated strong momentum with a 16.3% year-to-date return and currently trades near its 52-week high of $24.36.
The investment bank cited Franklin’s improving traction in alternative investments and moderating outflows from traditional products as key factors behind the upgrade. Goldman Sachs expects these trends to lead to break-even organic base fee growth in coming quarters, a significant improvement from the negative mid-single digit growth the asset manager has experienced over recent years. The company’s financial stability is evidenced by its impressive current ratio of 6.58 and a 45-year track record of consecutive dividend payments, as highlighted in InvestingPro’s analysis.
Goldman Sachs projects Franklin Resources’ earnings per share to accelerate to an 8% compound annual growth rate through 2027, following four consecutive years of negative EPS growth. The firm’s robust expense management, including cost reductions related to its Western Asset Management acquisition, is expected to contribute to this earnings improvement.
The investment bank’s new price target of $29 is based on a 7.75X EV/EBITDA multiple or 10.5X P/E ratio for quarters 5-8, representing a premium to Franklin’s historical valuation metrics to account for higher organic base fee growth. Goldman Sachs noted that the stock currently trades at 9X 2026 estimated P/E and 6.9X 2026 estimated EV/EBITDA.
Goldman Sachs revised its earnings per share estimates for Franklin Resources to $2.12, $2.55, and $2.87 for fiscal years 2025, 2026, and 2027, respectively. These updated projections average 10% above consensus estimates, according to Visible Alpha Consensus Data cited by the investment bank.
In other recent news, Franklin Resources has announced a quarterly cash dividend of $0.32 per share, marking a 3.2% increase from the same quarter last year. This dividend will be distributed to stockholders on record as of June 27, 2025, and is scheduled for payment on July 11, 2025. In addition, Franklin Resources has made a strategic move with a minor merger and acquisition deal in Europe, although specific details of the transaction remain undisclosed. Analyst firm TD Cowen has raised its price target for Franklin Resources from $27.00 to $28.00, maintaining a Buy rating due to positive long-term flow trends. The firm’s analysts highlighted the company’s strong performance in assets under management (AUM) and the reduction in WAMCO-related run-off. Franklin Templeton, a part of Franklin Resources, has also announced the liquidation of its Franklin FTSE Hong Kong ETF, with trading ceasing on July 2, 2025. Furthermore, the company appointed Surajit Ray as the new Head of Portfolio Construction and Quantitative Risk for its Franklin Equity Group. Ray’s appointment is expected to enhance the firm’s systematic, risk-aware portfolio construction processes.
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