Credit Suisse Starts Ameriprise Financial (AMP) at Neutral
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Credit Suisse initiates coverage on Ameriprise Financial (NYSE: AMP) with a Neutral rating and a price target of $116.00.
Analyst John Nadel commented, "AMP generates the highest ROE among our coverage given a less capital intensive business mix and consistently generates excellent free cash flow. That said, given a combination of slowing margin expansion in the company’s Advice & Wealth Management segment and uncertainty surrounding the impact of the upcoming DOL fiduciary rule, we see somewhat balanced risk/reward from current levels. Additionally, underlying net flow trends in Asset Management (excl. former parent outflows) have been weak. On a positive note, the company should deploy capital at a combined payout ratio (buybacks + dividends) well in excess of 100% of Operating Earnings over the next few years given solid FCF generation and ~$2b excess capital. Additionally, AMP has positive leverage to rising short-term interest rates. A December Fed hike by 25bps would add ~$0.24 to our 2017/18E EPS."
Shares of Ameriprise Financial closed at $102.81 yesterday.
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