AMP: Recent Team Departures Will Challenge Expense Discipline Going Forward

Analysts have adjusted their price target for Ameriprise downward by $51, reflecting cautious sentiment following recent quarterly results and ongoing expense trends.

Analyst Commentary

Bullish Takeaways

• Bullish analysts maintain a positive rating on Ameriprise shares despite the lowered price target. This suggests confidence in the company’s core strengths and potential for recovery.
• Management's efforts to enhance advisor compensation packages are viewed as beneficial for retaining talent and supporting steady growth in the advisory business.
• The company's ability to keep the distribution expense ratio within the targeted 66% to 67% range signals discipline in cost control, which can support long-term profit margins.

Bearish Takeaways

• Reduction in the price target highlights cautious sentiment about the near-term outlook and signals that some upside potential may already be reflected in the current valuation.
• Recent net outflows attributed to key team departures raise concerns about short-term growth in client assets and revenue generation.
• Elevated focus on ongoing expense trends, specifically advisor compensation, points to continued pressure on margins if costs are not carefully managed.

What's in the News

• AMP Limited has reached settlement agreements with certain insurers related to legal proceedings involving historical remediation programs concluded in 2022. (Key Developments)
• The company has received approximately $44 million in insurance proceeds to date, which covers compensation and costs from these programs. (Key Developments)
• AMP is continuing negotiations with additional insurers. A hearing regarding the same legal matters is scheduled for August 2025. (Key Developments)

Valuation Changes

• The Fair Value Estimate has risen slightly from A$1.90 to A$1.91, reflecting a minor upward adjustment in the company's intrinsic value assessment.
• The Discount Rate increased from 11.53% to 11.72%, indicating a slightly higher perceived risk or required return.
• The Revenue Growth projection improved marginally, with the anticipated decline easing from -20.21% to -20.17%.
• The Net Profit Margin estimate edged down from 24.28% to 24.24%, suggesting modestly lower expected profitability.
• The Future P/E Ratio has risen slightly from 19.23x to 19.44x, implying higher valuation expectations relative to forecast earnings.