On Wednesday, BofA Securities updated its outlook on shares of Invesco (NYSE:IVZ), raising the price target to $20 from the previous $18 while maintaining a Neutral rating on the stock. The adjustment reflects the firm's recognition of Invesco's multiple areas of potential progress, including organic growth, operating margins, and capital returns.
Invesco's organic growth has notably accelerated to 6% in the second quarter of 2024, marking the strongest performance since the first quarter of 2022. BofA Securities anticipates further advancements for Invesco, particularly in operating margins, which are expected to expand into the 33-35% range by 2027, compared to 28% last year.
The firm also highlighted Invesco's disciplined approach to expenses and the anticipated roll-off of Alpha implementation costs as contributing factors to the improved margin outlook. Moreover, Invesco is set to restart its share buyback program in the third quarter of 2024, targeting $25 million per quarter.
Looking ahead to 2025, BofA Securities projects an increase in Invesco's overall capital return to 50-60% of earnings. This forecast suggests that the company's quarterly buyback target could approach $30 million in the following year, further underscoring the firm's positive view on Invesco's capital management strategies.
In other recent news, Invesco has seen a series of promising developments. The asset management firm posted an adjusted earnings per share (EPS) of $0.43 for the second quarter, marking a rise from the $0.31 reported in the same quarter of the previous year. This figure exceeded the consensus estimate of $0.40, demonstrating a strong financial performance.
Invesco's average assets under management (AUM) also saw a 12% year-over-year increase, and net long-term inflows reached $16.7 billion in the second quarter, marking the fourth consecutive quarter of positive inflows.
In response to these developments, Argus raised Invesco's stock price target to $19.00 from $18.00, reaffirming a Buy rating on the shares. The firm is also implementing organizational changes to achieve net savings of $60 million in 2024 to combat margin pressures due to a shift towards lower-yielding products.
Invesco's recent performance has been particularly strong in the U.S. markets, with notable inflows in their global ETF franchise and fixed income strategies. The company has also announced plans to initiate a stock buyback program and maintain a total payout ratio between 50% and 60%. These are among the recent developments for Invesco, which continues to focus on expanding its ETF and fixed income offerings, especially in international markets.
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