Deutsche Bank Starts Franklin Resources (BEN) at Hold

Deutsche Bank initiated coverage on Franklin Resources (NYSE: BEN) with a Hold rating and a price target of $58.00.

Analyst Brian Bedell said, "We regard BEN as having among the most solid brands and reliable operating models in the industry, with highest margins on a net revenue basis. However, we think slower organic growth over next several quarters vs. a very strong pace over past four years will restrain upside potential in the shares over next 12 months."

"We see this being driven by: 1) risk of further global bond fund outflows in what has been an extremely successful category now amounting to 25% of AuM vs. 10% 5 years ago, 2) a much higher mix of retail fixed income vs. peers, which could drive significant outflows upon rising rates & 3) a lighter presence in some growth areas v. peers (e.g. solutions, ETFs, defined contribution). In addition, higher growth spending over next 1-2 years may restrain op margin expansion from industry-leading levels. Positively, BEN’s global distribution platform & product breadth are extremely strong, and its intermediary relationships in US are solid, & are strengthening abroad. BEN also remains among best capital return potential stories, returning over 50% of earnings to shareholders, which would be substantially bolstered if overseas cash became un-trapped from any possible future tax repatriation holiday," he added.

For an analyst ratings summary and ratings history on Franklin Resources click here. For more ratings news on Franklin Resources click here.

Shares of Franklin Resources closed at $55.87 yesterday.

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