TD Cowen has adjusted its outlook on shares of T. Rowe Price (NASDAQ: TROW), reducing the 12-month price target to $118 from the previous $123 while maintaining its Hold rating on the asset management company's stock.
The decision by the analyst at TD Cowen, which came on Monday, shows a cautious stance on the company's near-term prospects. The analyst pointed out that the management at T. Rowe Price has expressed confidence in achieving net inflows by 2025, which indicates a move towards breaking even.
However, the analyst also pointed out that the journey towards this goal appears to be more complicated due to various underlying factors affecting the base organic growth of the company.
The report from TD Cowen also mentioned that there were no significant changes to the adjusted earnings per share (EPS) estimates for the years 2024 and 2025. This suggests that the firm's projections remain slightly above the consensus for the upcoming year, despite the revised price target.
T. Rowe's assets under management amounted to $1.57 trillion, despite net outflows of $3.7 billion. Two-thirds of the firm's funds surpassed their one-year medians compared to peers. The ETF business displayed considerable growth, with assets under management rising to $5.3 billion from $1.2 billion in the previous year.
The company is also planning to diversify its ETF offerings and has introduced its first interval fund among other initiatives. However, the firm did experience $3.7 billion in net outflows, and fee compression is expected to persist.
InvestingPro Insights
In light of TD Cowen's revised outlook on T. Rowe Price, current data from InvestingPro provides additional context to the company's financial health. T. Rowe Price boasts a sturdy Piotroski Score of 9, suggesting that the company is in a strong financial position. Analysts have also revised their earnings upwards for the upcoming period, indicating potential optimism about the company's profitability.
InvestingPro Data highlights a P/E Ratio of 13.23, which is modest when paired with near-term earnings growth, suggesting that the stock may be undervalued. The company's revenue growth remains steady with an 8.56% increase over the last twelve months as of Q2 2024, and a gross profit margin of 50.69% showcases its efficiency in generating income from its sales. Additionally, T. Rowe Price has maintained dividend payments for an impressive 39 consecutive years, with a current dividend yield of 4.43%, reflecting a strong commitment to returning value to shareholders.
For investors seeking further analysis, there are additional InvestingPro Tips available, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These tips provide deeper insights into T. Rowe Price's financials and market performance, helping investors make more informed decisions.
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