On Thursday, Keefe, Bruyette & Woods adjusted its price target on T. Rowe Price stock (NASDAQ:TROW), increasing it to $113 from $111, while retaining a Market Perform rating. The adjustment follows T. Rowe Price’s recent financial report, which indicated a miss in capital allocation-based income and higher-than-expected compensation costs.
The firm’s analyst cited increased operating expenses, projected to rise by 4-6% in 2025, as a key factor influencing their forward estimates and contributing to the stock’s underperformance. Despite the higher operating costs, T. Rowe Price has made progress in reducing its organic decay, with outflows in 2024 amounting to approximately $43.2 billion, a significant reduction from the previous year’s outflows. The company maintains strong profitability with a gross margin of 52% and revenue growth of 9.8% in the last twelve months. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
T. Rowe Price’s collaboration with Aspida and potential product collaboration with Ares was acknowledged as a positive development, though it was noted that the impact of these partnerships is not yet substantial. However, the analyst found these moves noteworthy within the context of the current trends in the asset management industry.
The company’s efforts to address its organic decay and its strategic partnerships are part of T. Rowe Price’s broader strategy to navigate through the dynamic financial landscape. While the recent adjustments in operating expense guidance have affected analyst expectations, the firm’s ongoing initiatives demonstrate a commitment to adapting and potentially strengthening its market position in the long term.
In other recent news, T. Rowe Price Group’s fourth-quarter 2024 results fell short of analyst expectations, with adjusted earnings per share of $2.12 and revenue of $1.82 billion, both missing the consensus estimates. The asset management firm reported net client outflows of $19.3 billion for the quarter, and assets under management stood at $1.61 trillion as of December 31, 2024. Despite this, the company’s investment advisory fees increased by 16.1% year-over-year to $1.67 billion, while performance-based advisory fees declined by 23.7% to $19.3 million.
CEO Rob Sharps expressed optimism about the company’s path to positive flows and commitment to further reduce outflows. In terms of shareholder returns, T. Rowe Price returned $355 million in Q4 through dividends and share repurchases, totaling $1.5 billion for the full year 2024. These are among the recent developments that provide insight into the company’s performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.