Invesco (IVZ): Valuation Check After QQQ Conversion to Open-End ETF and Expected Revenue Uplift

Invesco (IVZ) just cleared a major strategic hurdle, with shareholders approving the conversion of its flagship QQQ fund into an open end ETF, a shift that directly targets higher efficiency and new revenue streams.

See our latest analysis for Invesco.

That QQQ conversion lands on top of a strong run, with a 30 day share price return of 17.74 percent and a year to date share price return of 54.9 percent. The 1 year total shareholder return of 63.33 percent and 5 year total shareholder return of 95.75 percent signal that momentum has been building rather than fading.

If strategic shifts at Invesco have you rethinking where growth and conviction overlap, it is a good moment to explore fast growing stocks with high insider ownership as potential next ideas.

With IVZ trading near its highs, a modest discount to analyst targets and a P E well below peers, investors face a key question: is this still an underappreciated earnings story, or is future growth already priced in?

Most Popular Narrative: 1% Overvalued

With Invesco trading around $27.34 against a narrative fair value near $27.08, the implied upside is minimal, putting every earnings assumption under the spotlight.

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.

Read the complete narrative.

Curious how a tiny revenue uplift, expanding margins, and a very different future earnings multiple all combine to defend this price tag? The full narrative unpacks the math.

Result: Fair Value of $27.08 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained fee pressure from cheaper ETF competitors, along with any disruption to the QQQ restructuring, could quickly undermine the margin expansion baked into expectations.

Find out about the key risks to this Invesco narrative.

Another Angle on Valuation

On earnings, Invesco looks reasonably cheap, with a P E of 18.2 times versus 25.1 times for the US Capital Markets industry, and close to a fair ratio near 19.2 times. Yet it trades slightly richer than peer averages, which raises the question: how much upside is really left if sentiment turns?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Invesco Narrative

If you see the numbers differently or simply want to test your own thesis, you can build a personalized view in minutes: Do it your way.

A great starting point for your Invesco research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Ready for your next investing move?

Before momentum shifts again, lock in your next watchlist candidates using the Simply Wall St Screener, so fresh opportunities do not slip past unnoticed.

• Capture potential mispricings early by scanning these 902 undervalued stocks based on cash flows that the market may be overlooking despite strong cash flow support.
• Position yourself for structural growth trends by targeting these 29 healthcare AI stocks at the intersection of innovation, data, and medicine.
• Harness volatility with purpose by filtering these 79 cryptocurrency and blockchain stocks that could benefit from increasing adoption of blockchain and digital assets.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com