Last Update 13 Dec 25

Fair value Increased 2.69%

IVZ: Future Returns Will Reflect Margin Leverage Amid Product Structure Uncertainty

Analysts nudged their price target on Invesco modestly higher, lifting fair value by about $0.71 per share to roughly $27.08 as they factor in improved operating leverage, slightly better revenue trends, and the longer term upside from QQQ structural changes despite near term execution noise.

Analyst Commentary

Street research remains broadly constructive on Invesco, with multiple firms lifting price targets into the mid to high $20s as they recalibrate for stronger market performance, improving margins, and the medium term optionality around the QQQ structural proposal. At the same time, there is recognition that near term execution risk and event timing could still inject volatility into the story.

Bullish Takeaways

Bullish analysts highlight that operating leverage is starting to show through in quarterly results, supporting upward revisions to earnings estimates and justifying higher price targets.
The proposed reclassification of the QQQ Trust into an open-ended ETF is seen as a meaningful long term growth and efficiency lever, potentially enhancing scale, reducing investor costs, and reinforcing the franchise value embedded in current valuation multiples.
Coverage initiations and target hikes emphasize that the shares remain inexpensive relative to peers, with further debt reduction expected to support multiple expansion and balance sheet flexibility.
Recent strength in global equity and fixed income markets is feeding into higher assets under management assumptions, which in turn underpins improved base revenue growth expectations for traditional asset managers, including Invesco.

Bearish Takeaways

Bearish analysts caution that the QQQ proxy process is proving slower and less straightforward than hoped, and any additional delays or failure to reach quorum could undermine confidence in management execution on this key strategic initiative.
The risk that the proposed QQQ structural change does not go through, even if viewed as unlikely, is seen as a potential setback for the longer term margin and growth narrative embedded in current price targets.
Several firms underline that the next few quarters may be noisy from an earnings and flows standpoint, which could create pressure on the stock if operating metrics or net new asset trends fall short of elevated expectations.
There is still lingering concern around legacy issues and the need for continued balance sheet cleanup, which, if slower than anticipated, could limit near term upside to the valuation re-rating story.

What's in the News

Invesco adjourned the special meeting to vote on the proposed QQQ Trust restructuring. The proxy vote was moved to December 5, highlighting ongoing process and quorum challenges (Bloomberg).
Entered a strategic partnership with LGT Capital Partners to develop multi-alternative private markets solutions, initially targeting U.S. wealth and retirement channels and expanding Invesco's alternatives footprint (company announcement).
Signed a $500 million Preferred Share Repurchase Agreement with Massachusetts Mutual Life Insurance Company for Series A preference shares at an 18% premium. This is expected to streamline the capital structure while MassMutual remains a major holder (company filing).
Indicated on its third quarter earnings call that it continues to evaluate M&A opportunities, with a particular focus on expanding in private markets to complement existing growth plans (earnings call commentary).
Completed another tranche of its long running share repurchase program, buying back over 1.2 million shares in the third quarter and bringing total buybacks under the 2016 authorization to more than 65 million shares (company disclosure).

Valuation Changes

Fair Value: Risen slightly from approximately $26.38 to about $27.08 per share. This reflects modestly improved long term assumptions.
Discount Rate: Decreased marginally from around 8.47% to about 8.45%. This implies a slightly lower perceived risk profile or cost of capital.
Revenue Growth: Improved modestly, with the long term contraction rate easing from roughly -4.36% to about -4.28%. This indicates a slightly less severe decline in expected revenues.
Net Profit Margin: Edged down fractionally from about 27.15% to roughly 27.09%. This suggests essentially stable long term profitability expectations.
Future P/E: Increased slightly from approximately 9.86x to about 10.12x. This signals a modest uptick in the multiple investors may be willing to pay for forward earnings.

Innovative ETF growth, digital transformation, and expansion in private markets position Invesco to capture shifting investor preferences and improve operating efficiency.
Strategic partnerships, modernization efforts, and disciplined cost management are expected to enhance revenue resilience, net profit, and long-term shareholder value.
Ongoing shifts to lower-fee products, rising competition, digital disruption, and regulatory pressures threaten Invesco's revenue, margins, and long-term profitability.

Catalysts

About Invesco

A publicly owned investment manager.What are the underlying business or industry changes driving this perspective?

Invesco's strong growth in global ETF and index products (notably QQQ and QQQM) and ongoing innovation in both active and passive strategies position the firm to benefit from the continued investor shift towards low-cost, scalable investment options, supporting asset growth and potentially higher fee-based revenue and operating margins.
The company's aggressive expansion in private markets and alternative asset offerings, including strategic partnerships (e.g., with Barings and MassMutual) and increased distribution through wealth management channels, aligns with the growing demand for alternatives and could drive higher-fee revenue streams and improved earnings resilience.
Invesco's ongoing digital transformation-seen in product launches, fintech platform adoption (e.g., hybrid State Street/BlackRock implementation), and a focus on SMAs and models-broadens its reach to new investor segments and supports higher operational efficiency, positively impacting net margins over time.
The proposed modernization of QQQ's fund structure from a unit investment trust to an open-end ETF is expected to directly improve net revenue and earnings by ~4 basis points due to simplified fee treatment and marketing efficiencies, providing a near-term boost to operating income.
Effective cost discipline, scale-driven margin expansion, and balance sheet optimization (deleveraging, regular share repurchases, and planned capital return) suggest sustained improvements in operating leverage and net profit, further enhancing future EPS and shareholder value.

Invesco Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Invesco's revenue will decrease by 8.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.9% today to 22.1% in 3 years time.
Analysts expect earnings to reach $1.1 billion (and earnings per share of $2.45) by about September 2028, up from $422.9 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.9x on those 2028 earnings, down from 22.9x today. This future PE is lower than the current PE for the US Capital Markets industry at 26.3x.
Analysts expect the number of shares outstanding to decline by 0.77% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.49%, as per the Simply Wall St company report.

Invesco Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The ongoing secular shift from higher-fee active management to lower-fee passive investment strategies and ETFs is reducing Invesco's net revenue yield, as evidenced by continued declines to 23.2 bps, and is likely to sustain pressure on its revenue and profit margins long term.
Increasing industry competition in ETFs and fundamental active equity, combined with softening demand for U.S.-based active equity products (highlighted by persistent net outflows of $4 billion in Fundamental Equities this quarter), could exacerbate margin compression and adversely affect both revenue and earnings.
The acceleration of digital and low-cost investing (including direct indexing, fintechs, and robo-advisors) may pose a threat to Invesco's traditional wealth management channels and AUM growth, pressuring future revenues as new generations of investors seek alternative platforms.
Regulatory changes and increased compliance costs-such as those impacting performance fees in China due to new requirements-could continue to erode Invesco's traditional earnings sources, particularly in performance fees and international markets, and increase long-term operating expenses.
Execution risks in expanding private market capabilities (via partnerships or M&A), difficulties achieving further cost efficiencies, and substantial ongoing implementation expenses (e.g., for technology changes through 2026) could limit improvements in net margins and weigh on long-term profitability if anticipated scale and synergies do not materialize.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $22.583 for Invesco based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $29.0, and the most bearish reporting a price target of just $17.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.8 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 11.9x, assuming you use a discount rate of 8.5%.
Given the current share price of $21.7, the analyst price target of $22.58 is 3.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

IVZ: Operating Leverage And Expense Management Will Drive Improved Margins Ahead