On Tuesday, BofA Securities updated its outlook on Ameriprise Financial (NYSE:AMP (OTC:AMLTF)), increasing the price target to $482 from the previous $452 while reiterating a Buy rating on the stock. The adjustment reflects an anticipated 12% return potential based on the firm's analysis.
The revision in the price target comes after BofA Securities adjusted its earnings per share (EPS) estimates for Ameriprise Financial for the years 2024, 2025, and 2026. The new EPS forecasts are set at $8.60 for the first quarter of 2024, and annual projections of $41.59 for 2025 and $48.17 for 2026. These figures are up from the former estimates of $8.55, $39.58, and $45.15, respectively. The changes are attributed to a combination of higher market sensitivity and increased deposit migrations into the bank, tempered by slightly higher sorting in the near term.
The analyst noted several potential catalysts for Ameriprise Financial that could emerge in the near future. These include the possibility of additional large enterprise channel wins, similar to the one announced with Comerica (NYSE:CMA) in the first quarter of 2023, and the potential for a reinsurance deal akin to the $6 billion long-term care (LTC) transaction between Manulife (TSX:MFC) and Global Atlantic.
During the fourth quarter of 2023 earnings call, Ameriprise Financial's management discussed assessing various options and monitoring spreads, particularly in relation to the company's LTC block. This block was sold on a guaranteed renewable basis, which permits the repricing of in-force policies with regulatory approval.
The price objective of $482 is derived by applying a 10x multiple to the firm's 2026 EPS estimates, a valuation approach that remains consistent with previous analyses. This price objective suggests a forward-looking perspective on Ameriprise Financial's financial performance and market position.
InvestingPro Insights
As Ameriprise Financial (NYSE:AMP) navigates the financial landscape, recent data from InvestingPro provides additional insights into the company's performance and stock valuation. The company's current Market Cap stands at an impressive $43.52 billion, indicating a significant presence in the market. With a Price to Earnings (P/E) Ratio of 17.95 and an adjusted P/E based on the last twelve months as of Q4 2023 at 16.72, Ameriprise Financial shows a solid earnings basis relative to its share price. Moreover, the company's Price to Book (P/B) ratio is high at 9.22, which may reflect investor confidence in the underlying asset value and management's effectiveness.
InvestingPro Tips highlight Ameriprise Financial's commendable track record of raising its dividend for 19 consecutive years and maintaining dividend payments for 20 consecutive years. The company's liquid assets surpassing short-term obligations is a testament to its financial health and ability to meet immediate liabilities. For investors seeking stability, the stock's low price volatility and the strong return over the last three months could be reassuring. Additionally, analysts predict profitability for the current year, backed by profitability over the last twelve months. With a large price uptick over the last six months and high returns over the last decade, the company has demonstrated resilience and growth potential. For investors looking for more in-depth analysis and additional InvestingPro Tips, a visit to https://www.investing.com/pro/AMP may prove valuable. There are 11 more tips available on InvestingPro for those interested in a deeper dive into Ameriprise Financial's performance.
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