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On Thursday, Morgan Stanley (NYSE:MS) adjusted its outlook on Invesco (NYSE:IVZ), reducing the price target from $19.00 to $18.00, while maintaining an Equal-weight rating on the company's shares. Currently trading at $17.58, the stock has seen 8 analysts revise their earnings estimates downward, according to InvestingPro data. The revision follows Invesco's latest disclosure of assets under management (AUM) for the month ending December.
The firm's average total AUM for the quarter was reported to have declined by 1.4%, a steeper drop than Morgan Stanley's previous estimate. Moreover, the end-of-period (EOP) total AUM saw a 4.7% decrease, again underperforming against prior expectations. Despite the downward trend in AUM, Invesco experienced better-than-anticipated long-term net flows, amounting to $25.6 billion for the quarter. This figure represents a 7.6% annual organic growth rate, surpassing the previously estimated $20.5 billion, or 6.1% annual growth. While maintaining an overall GOOD Financial Health Score, InvestingPro data indicates analysts expect revenue to decline this year.
Morgan Stanley's analyst cited these latest AUM figures as the primary reason for the updated estimates. Consequently, the firm's earnings per share (EPS) forecast for the fourth quarter of 2024 has been reduced by 12% to $0.53. The projections for the following years have also been revised, with the 2025 EPS estimate decreased by 9% to $1.99 and the 2026 EPS estimate lowered by 4% to $2.11.
The new price target represents a 5% decrease from the previous target, as stated by the Morgan Stanley analyst. This adjustment reflects the updated financial estimates and the impact of the recent AUM performance on the company's valuation.
In other recent news, Invesco has reported several significant financial updates. TD Cowen analysts maintained their Buy rating on Invesco, highlighting the company's stronger-than-expected assets under management (AUM) figures. Invesco's AUM as of December 31 was $1.846 trillion, approximately 0.60% higher than TD Cowen's projections, despite a slight month-over-month decline. This outperformance was attributed to strong inflows in both Long-Term and Global Liquidity assets.
Invesco also reported Long-Term inflows of $12.6 billion, resulting in an annualized organic growth rate (AOGR) of around 11%, significantly surpassing the estimated 3.4%. For the fourth quarter, Long-Term inflows reached $25.7 billion, or roughly 8% AOGR. These inflows were broadly distributed across various asset classes, with ETFs, Asia-Pacific (APAC), and Equity segments notably exceeding expectations.
On the earnings front, Invesco reported a robust performance for the third quarter of 2023, with total AUM reaching a record $1.8 trillion, marking a 5% increase from the previous quarter. The company's net long-term inflows stood at $16.5 billion, contributing to a 5.2% annualized organic growth rate. The ETF platform experienced significant inflows, particularly excluding the QQQ ETF, totaling $18 billion. These are the recent developments for Invesco.
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