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On Thursday, TD Cowen maintained a Hold rating on shares of Franklin Resources (NYSE:BEN) with a steady price target of $24.00. Following the market close on Wednesday, Franklin Resources disclosed its assets under management (AUM) as of September 30, which presented a mixed picture according to the firm.
On one side, there was an increase in attrition related to Western Asset Management Company (WAMCO), which was described as concerning. Conversely, the attrition reported from this unit appeared to align with market expectations, and the "core" AUM, excluding WAMCO, showed strength, particularly in equities, which stood out against weaker trends observed among peers.
TD Cowen's analyst noted that the solid performance in core volumes was led by positive equity results, which bucked the trend of weak performance seen in similar financial institutions. Despite the accelerated attrition at WAMCO, the overall assessment of Franklin Resources' AUM was seen as relatively stable. The expectation set by TD Cowen was for Franklin Resources' stock to have a mixed performance on the day of the announcement.
The firm's analysis of Franklin Resources' latest AUM report highlights the dual factors influencing the company's current valuation. While concerns over the accelerated attrition at WAMCO are evident, the strong results in core volumes provide a counterbalance. The Hold rating indicates that TD Cowen does not currently see a compelling reason to change its investment stance on Franklin Resources.
Investors are expected to weigh these factors as they consider Franklin Resources' financial health and growth prospects. The company's stock performance following the release of the AUM report will reflect the market's reaction to this mix of positive and negative indicators. Franklin Resources' ability to manage attrition and maintain solid core volumes will likely continue to be a focus for analysts and investors alike.
In other recent news, Franklin Resources reported a 1.3% increase in adjusted operating income, reaching $424.9 million, and a 15% year-over-year increase in assets under management, concluding the quarter with $1.65 trillion. The company also announced the closure of its $2 billion Macro Opportunities fund following an SEC inquiry and the departure of Ken Leech from Western Asset Management. Michael Buchanan has since stepped up as the sole Chief Investment Officer of Western Asset Management.
Analyst firms have been active in their coverage of Franklin Resources. TD Cowen maintained a Hold rating on the company, keeping the price target at $24. Barclays initiated coverage on the company, assigning an Underweight rating with a price target of $20.00, citing ongoing challenges in its active equities and fixed income segments.
In the realm of digital assets, Franklin Templeton, along with several other financial institutions, launched the first U.S. exchange-traded funds tied to ether. The company also maintained its quarterly cash dividend at $0.31 per share, a 3.3% increase from the same quarter of the previous year. These are among the recent developments for Franklin Resources.
InvestingPro Insights
Franklin Resources' recent financial data and market performance offer additional context to the AUM report discussed in the article. According to InvestingPro, the company's P/E ratio stands at 12.14, with an adjusted P/E ratio of 9.37 for the last twelve months as of Q3 2024. This relatively low P/E ratio, combined with the fact that the stock is trading near its 52-week low, suggests that the market may be pricing in concerns such as the WAMCO attrition mentioned in the article.
Despite these challenges, Franklin Resources maintains a strong dividend profile. The company offers a significant dividend yield of 6.32% and has maintained dividend payments for 44 consecutive years, as highlighted by InvestingPro Tips. This consistent dividend history could be attractive to income-focused investors, especially given the current market uncertainties.
The company's revenue growth of 5.78% over the last twelve months and 7.82% in Q3 2024 aligns with the article's mention of solid core volumes, particularly in equities. However, the EBITDA growth of -8.2% over the last twelve months indicates some pressure on profitability, which may be related to the attrition issues discussed.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Franklin Resources, providing a deeper understanding of the company's financial health and market position.
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