KBW Analysts Say Legg Mason Is 'On The Right Track Strategically'

Legg Mason Inc LM recently shared an update on its “strategic positioning, capital generation and management, and non-GAAP financial metrics.” Following this event, analysts at KBW reiterated an Outperform rating and $4 price target on the stock.

Overall, the meeting reaffirmed the experts’ belief that:

• 1) Legg Mason is “on the right track strategically,” as it has managed to refocus its business on market segments with potential for fast growth. However, some of the initiatives, especially recent acquisitions, will take some time to deliver accelerated growth.
• 2) Cash flow generation remains strong and the company continues to be well positioned to go on with its fast rate of stock repurchases and dividend growth.
• 3) Given the company’s “ability to leverage holding company and distribution expenses,” the potential to increase profitability with top-line growth remains substantial.

Other issues the analysts pointed out included the fact that this was the first time Legg Mason disclosed what it denominates "Parent Company Margin,” and the management team’s revision of capital management priorities and substantial cash benefits.