AMP: Future Expense Stability Will Depend On Advisor Compensation And Net Flow Trends

Analysts have modestly reduced their price target on Ameriprise Financial to $550 from $601, citing recent Q3 results, advisor team departures affecting net flows, and expectations that distribution expense ratios will remain elevated in the 66% to 67% range.

Analyst Commentary

Analyst reactions to the updated price target reflect a balanced view of Ameriprise Financial's fundamentals, execution, and near term growth trajectory.

Bullish Takeaways

• Bullish analysts highlight that the firm retains an Outperform rating, indicating confidence that earnings power and capital return can still support upside from current levels despite the lower target.
• They view the advisor compensation adjustments as a targeted investment in the franchise that can stabilize productivity, protect client relationships, and support longer term organic growth.
• The consistency of the distribution expense ratio within the 66% to 67% range is seen as evidence of cost predictability, aiding margin visibility and valuation support.
• Net flow pressure from the two advisor team departures is considered a transitory headwind rather than a structural shift in competitiveness, which limits the impact on longer term growth assumptions.

Bearish Takeaways

• Bearish analysts interpret the reduced price target as a signal that near term earnings momentum and growth expectations have moderated following Q3 results.
• They remain cautious that elevated distribution expense ratios, even if stable, could cap margin expansion and constrain upside to current valuation multiples.
• Advisor team departures raise concerns about potential further attrition risk and possible volatility in net flows, which could pressure assets under management growth.
• Higher advisor compensation packages, while strategically important, are seen as adding to structural cost pressure and increasing execution risk around achieving prior profitability targets.

What's in the News

• AMP Limited reached settlement agreements with some insurers over legal proceedings tied to historical remediation programs that concluded in 2022, securing approximately $44 million in insurance recoveries to date (company announcement).
• The company continues discussions and legal proceedings with several remaining insurers following an August 2025 hearing, seeking additional recovery of compensation and costs related to those past remediation efforts (company announcement).

Valuation Changes

• Fair value is unchanged at A$1.91 per share, indicating no adjustment to the intrinsic value estimate despite recent developments.
• The discount rate remains unchanged at 11.72%, suggesting the risk profile and required return assumptions for AMP remain consistent.
• Revenue growth is effectively unchanged at approximately minus 20.17%, with only immaterial rounding differences in the updated forecast.
• The net profit margin is effectively unchanged at approximately 24.24%, reflecting stable expectations for underlying profitability.
• The future P/E remains unchanged at about 19.4x, indicating no material shift in the valuation multiple applied to AMP’s forward earnings.