AMP shares slide as Citi downgrades stock to 'neutral'
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The news: AMP shares slipped in morning trade on the ASX, having surged over 17% on Thursday after the wealth manager posted its Q3 results.
The numbers: AMP shares lowered 1.9% to $1.57 by 11:45pm AEDT, having closed 17.34% higher on Thursday.
Analysts made the following changes to their ratings on AMP after it reported a rise in assets under management (AUM) during the September quarter:
- Citi downgraded AMP from 'buy' to 'neutral' but lifted its target price from $1.45 to $1.70;
- Morningstar increased its fair value estimate for AMP from $1.25 per share to $1.35; and
- Morgan Stanley stayed 'overweight' on AMP with a price target of $1.48.
The context: Citi analysts said that AMP's Q3 result provided more evidence that its businesses have "turned a corner", with improved platform flows, lower superannuation and investments outflows, and minor volume growth returning to the bank.
However, they flagged that the stock has "run very hard short term vs fundamentals", leading to their downgrade.
Morningstar analysts increased their fair value on AMP, primarily due to strong net inflows. However, they noted that shares are now trading above their revised fair value estimate, and remain cautious about potential downside risks.
Morgan Stanley analysts said that AMP's improved wealth flows and the bank's improving deposit mix during the September quarter makes them more confident in the company's path to return to consistent wealth inflows and a re-rating.
The sources: Citi research, Morningstar research, Morgan Stanley research
