There are turnarounds and there are rapid recoveries. Invesco Ltd. (NYSE: IVZ) has been turning its ship around after years of underperformance versus financial peers in asset management. But the rapid rise over the last 60 and 90 days has been hard to ignore. With shares above $21 at the present time, Invesco was at $17 just last week and under $14 at the plunge-depth lows in April. Now investors have to decide whether they should look for more strategic upside or if there are other opportunities in the financial stocks.
many investors will have to consider that this stock’s recover ahead of and then after the earnings report has eaten into near-term and even long-term upside. And, of course, Invesco has to keep generating more efforts to keep correcting its turnaround into higher valuations. This may give pause to some investors who will be hoping for a pullback from would-be profit taking or from a would-be general market pullback.
After rising more than 5% to $21.25 after this week’s earnings report, the stock has nearly doubled from its 52-week low of $11.60. It is also nearly challenging its 52-week high of $21.69. Perhaps the most important data for “range” trading is that this was nearly a $30 stock in 2021 and it was above $35 back in 2017. And for income and total return investors, even after the run higher, it still offers nearly a 4% dividend yield.
BIG UPSIDE ANALYST CALLS
Two different analyst reports stand out around the earnings report. One is a pre-earnings call from TD Cowen and one is a significant price target hike from Argus after the earnings report. Several brokerage firm analyst reports came with higher price targets but a less aggressive ratings (from BofA, JPMorgan, Goldman Sachs, Barclays and others).
TD Cowen upgraded Invesco to Buy from Hold and raised its price target up to $25 from $17.50. The call was just ahead of earnings, and after its recent UIT-ETF conversion news. But now TD Cowen has come out even more aggressive after Invesco’s earnings report by raising its price target to $29 from $25 in the updated call.
TD Cowen noted that Invesco’s registration documents requesting to migrate its QQQ exchange-traded fund from a unit investment trust to an open-end fund structure is a game-changing event for future revenues and income. TD Cowen sees the move signaling earnings accretion with room for additional “multiple expansion” on future earnings valuations.
Argus reiterated its Buy rating on Invesco, and it also raised its price target to $25 from $17, in its post-earnings call. Argus noted that net long-term inflows were a healthy $15.6 billion in the second quarter, despite market turmoil — but those net inflows have now been positive for the past 8 consecutive quarters while Invesco continues to show margin expansion and higher operating income from the prior year. There is also a solid value proposition in place as Argus pointed out below industry-average levels on P/E and price/book ratios while also returning capital to shareholders. The report said:
In our view, Invesco remains in show-me mode with investors, requiring strong execution with respect to leveraging Oppenheimer synergies, maintaining net inflows for long-term products, and controlling costs. The acquisition of Oppenheimer has allowed Invesco to leverage the investment and distribution capabilities of both firms. Invesco did not expect revenue synergies from the merger, though it has produced significant cost savings. Investor sentiment should also improve as the company approaches the margins of better-performing asset managers.
On top of Invesco highlighting its JV in China, the financial services company plans to enter the 401k market with private market products. And for its balance sheet, debt payment is also anticipated in the second half of 2025.
CFRA (S&P) reiterated its Buy rating on Invesco after the earnings report. After having bought back shares at a discount to current prices, and hiking a dividend payment, CFRA views Invesco’s stock as undervalued. It sees the proposed QQQ conversion (subject to shareholder approval) and strategic partnership with Barings providing additional catalysts for the shares even after the run up.
LESS AGGRESSIVE RATINGS, BUT BIG PRICE TARGET HIKES
These are the less aggressive analyst reports on the heels of Invesco’s better-than-expected earnings report. Even then some have price targets that are above the most recent share price, as follows:
- Barclays was the less aggressive call after earnings. It raised its price target to $22 from $17 while maintaining its Equal-Weight rating.
- BofA Securities maintained its Neutral rating while boosting its price objective to $18 from $15.
- Citigroup maintained its Neutral rating but boosted its target to $22 from $17.
- Evercore ISI maintained its In-Line rating but hiked its target to $23 from $17.
- Jefferies maintained its Hold rating but boosted its target to $21 from $16.
- JPMorgan maintained its Neutral rating but boosted its target to $24.50 from $17.
- Goldman Sachs maintained its Neutral rating but boosted its target to $24.50 from $17.50.
DISCLAIMERS
Please be advised that the analyst ratings and price targets mentioned above were issued by each firm named in this reporting. Their ratings and targets may be significantly different that ratings and price targets from other analyst calls that may be issued. Investors need to always keep in mind that analysts sometimes get their thesis and outlook wrong. And sometimes the fundamentals of a company, its sector or the economy as a whole can change in an instant.
Oggonomics does not issue any formal ratings and does not maintain any price targets of its own in the companies mentioned in this report. Interpretations of how positive or negative the analyst calls are can also wildly vary from investor to investor.
No analyst ratings and their price targets, even those with the strongest conviction or strongest pessimism, ever come with any guarantees of profits. Analysts reports also never have money-back guarantees in the event that investors lose money.
