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Independent investment manager Invesco Ltd. (NYSE:IVZ) shares are up just 3 percent over the past six months. But after the company reported fourth-quarter results Wednesday, one Wall Street analyst is suggesting investors take advantage of the recent weakness.
The Analyst
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Credit Suisse's Craig Siegenthaler upgraded Invesco's stock rating from Neutral to Outperform with a price target lowered from $43 to $42.
The Thesis
Invesco's stock has been the second-worst performer within the asset management sector, and multiple sell-side firms reduced their rating on Invesco over the past month, Siegenthaler said in the upgrade note.
Taking the other side of the trade, the analyst said he sees a path for Invesco to exceed expectations in 2019. The company will likely see a 3-to-4-percent organic growth rate in 2019, which would result in an earnings per share growth rate of 10 to 15 percent in 2019 and 2020 — meaning the company would have the second-highest growth rates among all traditional asset management firms, the analyst said.
Invesco's next 12 months P/E ratio stands around 10 to 15 percent below its 10-year average and comes at a time when most large-cap stocks are trading near their cyclical highs, Siegenthaler said.
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The stock's valuation today is likely too low and does not fully reflect the following factors, according to Credit Suisse:
- The PowerShares business, which is the fourth largest ETF business globally.
- Superior growth rates in Asia.
- Superior growth rates in Europe.
- The potential for a high EPS growth rate coupled with a low PEG ratio.
Price Action
Shares of Invesco were trading higher by 0.58 percent late in Thursday's trading session.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.