On Monday, Deutsche Bank adjusted its outlook on Affiliated Managers Group (NYSE:AMG), increasing the stock's price target to $202.00 from the previous $188.00. The firm maintained its Buy rating on the shares. The upgrade follows a series of positive financial maneuvers by the company, including an aggressive share repurchase program.
The company's capital return strategy has been a key factor in the revised target. Affiliated Managers Group has bought back $327 million of its shares in the recent quarter, with a total of $477 million repurchased in the first half of 2024. Furthermore, the company has updated its guidance, projecting over $700 million in share repurchases for the full year of 2024. This activity has significantly reduced the diluted share count by 9% for the upcoming third quarter compared to the first quarter of 2024.
Management at Affiliated Managers Group highlighted the firm's robust capital position during their earnings call. The company boasts a leverage ratio of just 1.7x, $1.25 billion in available revolving credit, and the generation of approximately $1 billion in annual pretax cash flow. This strong financial standing is expected to support continued high levels of share repurchase and leaves ample capacity for new investments in affiliates.
The decrease in share count, coupled with slightly improved assets under management (AuM) growth, has led to notable positive adjustments in earnings per share (EPS) forecasts. This reassessment has contributed to the increased 12-month price target for Affiliated Managers Group shares.
In their comments, Deutsche Bank reiterated their confidence in the company, stating, "A reduced share count combined with slightly better AuM growth drove significant positive EPS revisions to our forecasts and an increase in our 12-month price target to $202 from $188. We reiterate our Buy Rating." The firm's outlook suggests a continued bullish stance on the financial services company's stock performance.
In other recent news, Affiliated Managers Group (AMG) has demonstrated a strong start to 2024, revealing significant year-over-year growth in EBITDA, which reached $260 million, marking a 28% increase from the previous year. In addition, the company's economic earnings per share rose to $5.37, reflecting robust growth. Despite some outflows in equities, AMG's diverse portfolio and focus on alternative investments are expected to drive long-term growth and shareholder value.
TD Cowen recently revised its outlook for AMG, reducing the stock's price target to $198 from the previous $218, while maintaining a Buy rating for the shares. This adjustment was made in light of a cautious stance on equities after the first quarter of 2024. Despite the reduction in the price target, TD Cowen stands by its Buy rating for AMG, signaling continued confidence in the company's fundamentals while adjusting expectations to market conditions.
InvestingPro Insights
Recent data from InvestingPro underscores the positive sentiment surrounding Affiliated Managers Group (NYSE:AMG). With a market cap of $5.85 billion and an attractive P/E ratio of 9.12, the company presents a compelling value proposition. Adjusted figures for the last twelve months as of Q1 2024 show a slightly higher P/E ratio of 9.81, reflecting market adjustments. The company's price to book ratio during the same period stands at 1.63, indicating a potentially undervalued stock relative to its assets.
Moreover, two key InvestingPro Tips highlight the company's strategic financial decisions: Management's aggressive share buyback initiative, and the fact that 5 analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's financial prospects. Additionally, AMG's liquid assets exceed its short-term obligations, providing further stability to its financial structure.
For investors seeking more in-depth analysis and additional InvestingPro Tips, there are 7 more tips available that could provide valuable insights into AMG's performance and potential. To access these tips and enhance your investment strategy, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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