Insignia shares extend gains, Morgan Stanley mixed on result
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The news: Insignia Financial extended Monday's gains in morning trade on the ASX, as Morgan Stanley analysts weighed the wealth manager's upgraded earnings guidance against persisting "balance sheet concerns".
The numbers: Insignia shares were up 6% to $2.65 by 11:00am AEST while Morgan Stanley have a price target of $2.30 and an 'underweight' rating on the company.
On Monday, shares rose 5.88% after the company upgraded its full-year profit guidance and announced that a $10 million remediation fine paid to the prudential regulator would not require a capital raise.
Morgan Stanley analysts said that Insignia's new FY24 underlying NPAT guidance, with a midpoint of $215 million, was 14% ahead of its estimates and 9% above consensus. However, a $188 million pre-tax increase in remediation provision "will be a strain on the balance sheet", they said.
The context: Morgan Stanley analysts said that its investment thesis remained unchanged following the earnings update, seeing a "modest upside" in the result versus consensus.
They noted that margin headwinds and falling adviser numbers are counterweighted by Insignia's attractive positioning as a pure play on advice and superannuation.
The source: Morgan Stanley research
