UBS downgraded Invesco ( NYSE: IVZ ) to Neutral from Buy as the stock hit its $19 price target and is fairly valued, while earnings upside may be limited.
Also, expectations of a rebound in flows "seems optimistic" in the current environment. "Given increasing headwinds for growth drivers, with continued fee rate and roughly 200 bps of PT margin pressure ahead this year, IVZ's 2.8x leverage ratio makes the stock more vulnerable than peers," said analyst Brennan Hawken.
"While we like IVZ's diverse products and distribution, near-term headwinds for flows, fee rates and margins, and limited flexibility for buybacks could limit IVZ's share performance, and we view the shares as fairly valued."
UBS raised its EPS estimates for Invesco ( IVZ ) by $0.10 to $1.75 in 2023 and by $0.05 to $2 in 2024 on higher AUM and revenues, partially offset by lower forecast flows and operating margin.
Owing to lower average AUM and revenue pressure, operating margin is projected to contract ~200 bps this year.
UBS raised its PT on Invesco ( IVZ ) to $20 from $19 (3.8% potential upside to last close).
The research firm's Neutral stance on Invesco ( IVZ ) is in line with sell-side and SA Quant ratings .
Earlier, Invesco ( IVZ ) was downgraded to Hold at Deutsche Bank on dim equity markets outlook .
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UBS cuts Invesco to Neutral as stock fairly valued, earnings upside likely limited