Uzbekistan And Saudi Arabia Expansion Will Unlock Future Diversification

Analysts have raised their price target for Franklin Resources from $19 to $22, citing stronger than expected performance across global equity and bond markets that lifted the firm's earnings outlook.

Analyst Commentary

In response to Franklin Resources' improved performance outlook, analysts have identified both strengths and ongoing concerns that may affect the company's valuation and growth trajectory in the near term.

Bullish Takeaways

• Bullish analysts highlight the positive impact of strong global equity benchmarks, which rose between 6% and 13% in Q3. This has boosted the firm's earnings outlook.
• Modest returns in bond markets, ranging from 1% to 3%, have contributed to increased estimates for future earnings per share and overall financial performance.
• The recent rally in both equity and bond markets has led to upward adjustments in price targets across traditional asset managers, with Franklin Resources benefiting from this support.

Bearish Takeaways

• Bearish analysts maintain caution regarding the firm's rating and cite only modest movements in foreign exchange markets, which may limit upside potential.
• Despite the elevated price target, underlying concerns persist around the competitive landscape for traditional asset managers and potential market volatility.
• Execution risks remain. Longer-term trends in active management and fee pressures could challenge sustained growth and margin expansion.

What's in the News

• Franklin Templeton is among at least seven asset managers that have filed amended S-1 registration statements for proposed spot solana ETFs with the SEC, with a potential decision on approvals expected by late August or September (CryptoNews).
• Franklin Resources has launched tax aware long-short strategies on its Canvas platform, offering advisors individualized, tax-managed investment tools, starting with a U.S. Large Cap 130/30 structure.
• The company announced a strategic partnership with leading infrastructure investment firms, including Actis, Copenhagen Infrastructure Partners, and DigitalBridge, to deliver private infrastructure solutions focused on energy security, electrification, and digitalization.
• Franklin Templeton and Binance have teamed up to explore digital asset initiatives that combine tokenization of securities with global trading infrastructure, aiming to increase efficiency and accessibility in capital markets.
• Franklin Templeton Canada expanded its ETF line-up with two new index-tracking ETFs: a U.S. Quality Moat Dividend Index ETF and an FTSE India Index ETF, both offering low management fees.

Valuation Changes

• The Fair Value Estimate has increased slightly from $25.00 to $25.45, reflecting minor upward adjustments in valuation models.
• The Discount Rate has risen marginally from 8.83% to 8.92%, suggesting a slightly higher perceived risk or cost of capital.
• The Revenue Growth Forecast has declined significantly, moving from 1.04% previously to 0.62% in the updated outlook.
• The Net Profit Margin Estimate has edged down from 15.64% to 15.45%, indicating a slight narrowing of expected profitability.
• The Future Price-to-Earnings (P/E) Ratio has increased from 11.71x to 12.24x, signaling a higher valuation relative to earnings expectations.