UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Raises PT on Franklin Resources

In a report published Monday, BMO Capital Markets reiterated its Market Perform rating on Franklin Resources BEN, and raised its price target from $144.00 to $149.00. BMO Capital Markets noted, “Franklin reported EPS of $2.42, which was ahead of our estimate of $2.34 and consensus of $2.38, owing mainly to lower net income attributable to non-controlling interests. EPS from asset management operations of $2.27 missed our estimate of $2.32, owing to lower-than-expected average AUM and an investment management fee rate of 62.5 bp vs. our estimate of 63.1 bp. Key takeaways include: 1) the slight erosion in the fee rate over recent quarters is from the mix shift toward fixed income and hybrid products as well as toward institutional clients, which all tend to be lower fee, 2) net new asset growth of +$0.3B (0.2% annualized growth) was just below our estimate of +$1.3B (0.7%), owing mostly to weakness in equity flows, which was common across the industry, 3) international net new flows were stronger than the US in the quarter at 2.3% and -0.2% annualized growth respectively; Europe benefitted from improved retail flows given a more positive regional and market outlook, and 4) BEN launched its new RIVA Transfer Agent software solution, which has been under development for five years; this system improves global scalability and may generate future earnings by licensing it to third parties.” Franklin Resources closed on Friday at $139.77.