Pali Boosts Estimates on Asset Managers Ahead of Q3 Earnings (BEN, IVZ, BLK, ART, LM, TROW)

October 5, 2009 1:13 PM EDT

An analyst at Pali Research has increased his earnings estimates on several asset managers this morning. The note comes ahead of Q3 results, which are expected out over the next month or so.

• Franklin Resources (NYSE: BEN) - Buy rated with a $108 price target. Calls BEN "our favorite asset manager stock". Trading at 17x the firm's CY10 EPS estimate of $5.87, Pali notes that the stock trades at an 8% discount to the rest of the group. The firm also likes BEN's balance sheet, its cost cutting efforts, its position to get deals done or return cash "via buybacks or dividends" and also its organic growth trends which are at the high end of the industry. Pali raises its Q4, FY09 and FY10 EPS estimates from $1.21, $3.49 and $5.39 to $1.31, $3.59 and $5.69, respectively. The Street is currently looking for Q4 EPS of $1.22, FY09 EPS of $3.45 and FY10 EPS of $5.16.
  
• Invesco (NYSE: IVZ) - Buy rated, target raised from $23 to $24. Pali feels that Invesco's long-term story is improving, citing sequential improvements in both equity and fixed income, and also the possibility for an acquisition on the horizon. The firm raised its Q3 estimate on IVZ from $0.19 to $0.25, its FY09 estimate from $0.66 to $0.79, and its FY10 estimate from $1.09 to $1.19.
  
• BlackRock (NYSE: BLK) - Neutral rated. The firm moves its Q3, FY09 and FY10 estimates from $1.96, $6.56 and $9.38 to $2.17, $6.92 and $10.07, respectively. The analyst consensus is currently $1.85 for Q3, $6.37 for FY09 and $9.45 for FY10.
  
• Artio Global Investors (NYSE: ART) - Neutral rated. Q3 estimate from $0.36 to $0.39, FY09 estimate from $1.37 to $1.42 and FY10 from $1.65 to $1.72.
  
• Legg Mason (NYSE: LM) - Sell rated, price target remains at $24. Pali believes Legg Mason's flow story still remains a challenge. The firm is concerned that outflow will be greater than previously implied through August: $7-9 billion in long-term outflow vs $6 billion in liquidity outflow. Q2 and FY10 estimates remain at $0.18 and $1.18, respectively, and its FY11 estimate moves from $1.41 to $1.44. The Street is currently looking for Q2 EPS of $0.19, FY10 EPS of $1.17 and FY11 EPS of $1.46.
  
• T. Rowe Price (Nasdaq: TROW) - Sell rated, target raised from $40 to $41. Q3, FY09 and FY10 estimates raised from $0.39, $1.37 and $1.80 to $0.43, $1.42 and $1.72, respectively. The analyst consensus for Q3 is $0.44, $1.48 for FY09 and $2.06 for FY10.

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• Citi
• Pali Research
• Dividend

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