AMP dips as Morgan Stanley upgrades stock to 'overweight'
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The news: AMP shares dipped on the ASX, after early gains, despite receiving a ratings upgrade from Morgan Stanley analysts.
The numbers: AMP shares were down 0.2% to $1.28 by 11:20am AEST. The stock jumped 13.5% on Thursday after the company posted better-than-expected underlying profit for the half-year to June, and outlined further divestments including its majority stake in advice licences.
Morgan Stanley upgraded AMP from 'equal-weight' to 'overweight' and raised its price target from $1.29 to $1.48.
Morningstar also lifted its fair value estimate on the stock from $1.20 to $1.25.
The context: Morgan Stanley analysts said AMP is becoming a "more focused wealth and bank operator" and "presents a compelling case", with robust earnings-per-share growth and a cost plan that "compares favourably" to ASX peer Insignia Financial.
Morningstar analysts Shaun Ler noted that AMP's result "surpassed expectations", with surprises including better-than-expected platform and master trust flows, improvement in advice business productivity, and variable cost savings.
What they said: "AMP is achieving consistently on costs, revenue margins, and flows, while reducing one-offs and presenting a clearer path to break-even in advice," Morgan Stanley analysts said. "This should drive a re-rating."
The sources: Morgan Stanley research, Morningstar research
