Buckingham Research Downgrades AMVESCAP PLC (AVZ) to Neutral

November 20, 2006 10:05 AM EST

Buckingham Research downgrades AMVESCAP PLC (NYSE: AVZ) from Strong Buy to Neutral.

Buckingham analyst, William R. Katz, says, "We are downgrading our rating from Strong Buy to Neutral and removing our formal $32 DCFderived 12-month price target. Our downgrade reflects renewed speculation in the 11/20 Wall Street Journal that the Putnam bake-off is moving into the final stages, with AVZ once again considered a finalist, in addition to Italy-based Unicredito and Canada-based Power Group. Per the WSJ, bids are due by Thanksgiving, with Marsh McLennan (NYSE: MMC, Not Rated) expected to make a decision over the next several weeks, including possibly not even selling the beleaguered unit should they not receive an appropriate price (though we believe this reflects late stage
jawboning/deal negotiation).

While a prospective deal with Putnam likely would be well crafted financially – including longtailed
revenue/AUM-related earn-outs and solid return on investment – we believe a deal of this magnitude and complexity comes at a bad time for AVZ and negates our prior recommendation built on a multi-year turnaround thesis and concomitantly raises significant execution risk."

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