On Tuesday, RBC Capital Markets adjusted their outlook on Ameriprise Financial (NYSE:AMP (OTC:AMLTF)) stock, increasing the price target to $500 from the previous $487, while reaffirming an Outperform rating. This adjustment comes as a result of Ameriprise Financial's second-quarter results, which exceeded the expectations of the analyst firm.
The commentary from RBC Capital highlighted the cash balances within Ameriprise's Advice & Wealth Management (A&WM) business as a point of interest. The analysis suggests that, compared to peers, Ameriprise's clients tend to have relatively lower cash balances, which could result in these balances being more resilient or "stickier."
RBC Capital also noted Ameriprise's continued commitment to maintaining tight control over expenses. The firm anticipates potential for further efficiencies within the asset management business, which could contribute to Ameriprise's strong performance.
The firm's confidence in maintaining an Outperform rating for Ameriprise Financial is based on what it views as robust fundamentals within the A&WM business. Additionally, the capital-return narrative for Ameriprise was cited as a positive factor influencing the firm's outlook.
The revised price target of $500 reflects RBC Capital's updated expectations following the analysis of Ameriprise's recent financial results and the company's operational focus areas. The target suggests a positive trajectory for the financial services provider's stock value in the eyes of the analyst firm.
In other recent news, Ameriprise Financial has posted an impressive performance for the second quarter of 2024, recording revenues of $4.2 billion, marking a new high for the company. This is coupled with a 17% year-over-year increase in earnings per share to $8.72. Furthermore, the company's assets under management and administration have grown by 12% to reach $1.4 trillion.
Ameriprise Financial has also showcased its commitment to shareholders by returning $693 million in the quarter, with plans to distribute 80% of its operating earnings throughout the year. Despite a 13% increase in adjusted operating expenses due to business expansion and higher transactional activity, the company remains focused on future growth through its diversified business model.
The company's Asset Management business is making significant strides, particularly in the Asia-Pacific region, targeting larger institutions and pension funds. However, Ameriprise Financial is reviewing its Net Interest Income as it is not meeting bottom-line expectations. These are among the recent developments at Ameriprise Financial.
InvestingPro Insights
Following RBC Capital Markets' updated outlook on Ameriprise Financial, real-time data and InvestingPro Tips provide additional context for investors considering Ameriprise's stock. The company boasts a Piotroski Score of 9, indicating strong financial health. Furthermore, Ameriprise has a notable track record of raising its dividend, doing so for 19 consecutive years, which may interest income-focused investors. While some analysts have revised their earnings expectations downwards for the upcoming period, the company's low P/E ratio relative to near-term earnings growth presents a potentially attractive valuation proposition.
InvestingPro Data underscores Ameriprise's financial performance with a market cap of $42.51 billion and a P/E ratio of 14.56, which adjusts to 13.76 on a last twelve months basis as of Q2 2024. The company's revenue growth of 12.45% over the last twelve months as of Q2 2024, coupled with a robust gross profit margin of 58.34%, highlights its profitability and efficiency. Investors may also find the dividend yield of 1.37% as of 2024 appealing, especially considering the company's history of dividend growth, which was 9.63% over the last twelve months as of Q2 2024.
For those seeking a deeper analysis, additional InvestingPro Tips are available, with a total of 11 tips listed on the InvestingPro platform for Ameriprise Financial. These tips, along with more in-depth metrics, can be accessed by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, enriching the investment decision-making process.
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