China chip stocks rally on self-reliance bets, Nvidia scrutiny
On Wednesday, Citi maintained a Neutral rating on Invesco (NYSE:IVZ), while increasing the price target to $17.50, up from the previous target of $16.00. This adjustment follows Invesco's second-quarter performance in 2024, which saw the company's shares rise by 1.9%.
The firm's management highlighted several positive developments, including an improving outlook for the Asia-Pacific (APAC) region and Fixed Income, Currencies, and Commodities (FICC) segment, as well as consistent strength in Exchange-Traded Funds (ETFs). Additionally, there is a strategic focus on enhancing the fundamental equity segment.
Citi's updated estimates come after Invesco's second-quarter results surpassed expectations. The firm made slight revisions to Assets Under Management (AUM), net revenue yield, and expense estimates. Consequently, the estimated earnings per share (EPS) for 2024 and 2025 have been adjusted to $1.63 and $1.86, up from the previous forecasts of $1.62 and $1.84, respectively.
The new price target of $17.50 is based on an 11x multiple of the projected 2024 EPS and a 9x multiple of the projected 2025 EPS. These multiples reflect the positive revisions to Citi's EPS estimates for Invesco.
Citi noted improvements in Invesco's financial narrative but indicated that further evidence of progress is needed before the firm would consider changing its stance on the stock. The analyst's comments suggest that while there are signs of an improving story for Invesco, a more substantial track record of performance is awaited.
In other recent news, Invesco, a global investment management firm, has been making significant strides. The company reported a strong second quarter with a 6% organic growth rate, largely due to the success of its ETFs, active fixed income, and Asian market presence. This performance is expected to be the best among traditional asset managers this earnings season.
Invesco's second quarter was also marked by effective expense control, margin expansion to 31%, and a 3% assets under management (AUM) tailwind entering the third quarter. The company plans to resume its stock buyback program in the third quarter, nearing net zero debt.
Despite ongoing challenges like fee pressures and increases in redemptions, Invesco is focusing on driving positive flows and investing in growth solutions, such as recently launched sustainable energy and Ethereum ETFs.
Notably, Invesco was involved in the launch of the first U.S. exchange-traded funds (ETFs) tied to ether, marking a significant milestone for the cryptocurrency sector. Analyst firms like Conotoxia Ltd and Galaxy Research highlighted the importance of these ether ETFs in the development of the cryptocurrency market.
In terms of analyst ratings, Evercore ISI increased Invesco's price target from $16.00 to $17.00, maintaining an "In Line" rating. TD Cowen reaffirmed its Buy rating on Invesco, with a slightly more conservative approach to modeling the impact of distribution, while RBC Capital maintained its Sector Perform rating with a steady price target of $16.00.
InvestingPro Insights
In light of Citi's recent neutral stance on Invesco (NYSE:IVZ), InvestingPro data and tips offer additional insights. The company's market capitalization stands at $7.56 billion, with a significant improvement in the adjusted P/E ratio to 3.11, reflecting a more favorable valuation compared to the previous negative figure. Additionally, the PEG ratio, which measures a stock's valuation while also accounting for growth, is notably low at 0.15, indicating potential undervaluation relative to expected earnings growth.
InvestingPro Tips highlight that despite 7 analysts revising their earnings downwards for the upcoming period, there is an expectation of net income growth this year. Moreover, Invesco has a strong track record of dividend payments, maintaining them for 18 consecutive years, which may be appealing to income-focused investors. Furthermore, the company's liquid assets exceed short-term obligations, underscoring a solid liquidity position.
For readers seeking to delve deeper into the financial health and future prospects of Invesco, InvestingPro offers additional tips and metrics. Utilize the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and gain access to more than six additional InvestingPro Tips that could further inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.