On Monday, TD (TSX:TD) Cowen updated its outlook on Invesco Ltd. (NYSE:IVZ), raising the stock price target to $22.00 from the previous $21.00 while maintaining a Buy rating on the shares. The firm's decision comes in response to Invesco's performance, which has shown better-than-expected fund flows compared to its peers in the early months of the year.
Despite the year-to-date weakness in Invesco's share price, the analyst highlighted the firm's robust fund flows in January and February as a positive sign. These results were detailed in reports released on February 12 and March 12 and 13, respectively. The analyst believes that Invesco's balance sheet repair efforts will continue to support its valuation.
A key point of observation for Invesco will be its operational expenditure, particularly as the company invests heavily in its mid and back office conversion process. The analyst notes that this seems to be an ongoing cycle of reinvestment. However, TD Cowen's financial model has accounted for these higher expenses.
The firm's projections remain optimistic, with estimates approximately 4% and 9% above the consensus for Invesco's 2024 and 2025 earnings, respectively. The analyst's commentary suggests confidence in Invesco's future performance despite the current high operational spending.
InvestingPro Insights
In line with TD Cowen's positive outlook on Invesco Ltd. (NYSE:IVZ), InvestingPro data and tips provide a deeper financial perspective. According to recent metrics, Invesco's market capitalization stands at $7.57 billion, reflecting the scale of the company in the financial sector.
While the company has experienced a sales decline of 5.5% over the last twelve months as of Q4 2023, the adjusted P/E ratio has improved to 4.52, suggesting a more favorable earnings perspective relative to the stock price. Moreover, the PEG ratio, which indicates the stock's value while taking into account expected earnings growth, is notably low at 0.15, hinting at potential undervaluation.
InvestingPro Tips further enrich our understanding of Invesco's position. Analysts are expecting net income growth this year, which could signal a turnaround from the previous unprofitable twelve months. This is in line with the 4 analysts who have revised their earnings upwards for the upcoming period, indicating a more bullish sentiment.
Moreover, Invesco has shown commitment to shareholders by maintaining dividend payments for 18 consecutive years, with a current dividend yield of 4.8% and a dividend growth of 6.67% in the last twelve months as of Q4 2023.
For investors seeking more comprehensive analyses, there are additional InvestingPro Tips available at https://www.investing.com/pro/IVZ, which could offer further insights into Invesco's financial health and market potential. Remember, using the coupon code PRONEWS24 can provide an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing the investment decision-making process with valuable resources.
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