AB - AllianceBernstein raised to Outperform at Credit Suisse after Q4 earnings beat

Credit Suisse analyst Bill Katz on Monday upgraded shares of AllianceBernstein Holding ( NYSE: AB ) to Outperform from Neutral on more favorable growth prospects through 2024 following stronger-than-expected Q4 earnings .

Katz pointed to a number of tailwinds for the asset manager this year and next, including: "AB may be beneficiary of Active Fixed Income (FI) allocations against more checkered potential elsewhere; 3) we see several potent margin levers through 2025; 4) the base fee rate is likely to grind higher (mix) versus likely further sector contraction; 5) 2023-24 consensus estimates seem rational/moderately low; and 6) model continues to migrate to higher multiple outcome," he wrote in a note to clients.

Some key risks, though, include a potentially uneven Fixed Income flow trends, as well as further strength in the U.S. dollar that could moderate non-U.S. Equity volumes.

With investment returns hampered by falling equity and fixed income markets last year, "we enter 2023 with an AUM base 17% below the prior year period, necessitating global cost reduction measures, including headcount reduction, while balancing select growth investments," said Seth P. Bernstein, president and CEO of AllianceBernstein ( AB ).

The Outperform rating diverges from the Quant system rating and the average Wall Street analyst rating, both at Hold.

AB drifted higher by 0.9% in premarket trading.

Last week, (Feb. 9) AllianceBernstein garnered a 5.3% M/M increase in January AUM.

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