Insignia shares rally as UBS expects 'positive' cost cuts
Make us a preferred source
Make us a preferred source on Google
The news: Insignia Financial shares rallied on the ASX after UBS upgraded the wealth manager on expectations of upcoming cost initiatives.
The numbers: Insignia shares were up 6.3% to $3.21 by 1:20pm, after edging down on Thursday after posting its first-quarter results.
UBS upgraded its rating on Insignia from 'sell' to 'neutral' and hiked its price target from $2.30 to $3.10 per share.
UBS also increased its earnings per share forecasts by 8% in FY25, 17% in FY26 and 26% in FY27, reflecting the Q1 update.
The context: UBS said its upgrades were driven by potential cost-outs, which may see a "significant reduction" in the market's operating expenditure outlook. It said that Insignia's investor day on 13 November may see "positive news" around further cost initiatives, having reduced concerns around near-term gearing following the company's pause in dividends.
Meanwhile, Morgan Stanley analyst Andrei Stadnik flagged that Insignia has a "substantial amount of work in front of it before it can stabilise flows".
He noted that Insignia's outflows during the September quarter and funds under management and administration "lagged peers".
Morgan Stanley has an 'underweight' rating on the stock with a price target of $2.21.
The source: UBS research
