On Thursday, CFRA raised the price target for Ameriprise Financial (NYSE:AMP (OTC:AMLTF)) to $575 from the previous $500 while keeping a Buy rating on the stock. The adjustment reflects a valuation of AMP shares at 13.7 times the firm's 2026 adjusted earnings per share (EPS) estimate of $42.10, which has been increased by $1.00 today, and 15 times the 2025 EPS estimate of $38.25, which has been raised by $0.10.
The analyst noted that the new 12-month target price represents a significant increase and is based on the company's performance and potential. Despite a reduction in the 2024 EPS estimate by $0.43 to $34.07, the firm's third-quarter earnings per share of $8.10, which fell short of both their $8.73 estimate and the $8.92 consensus, were primarily affected by a $3.93 mark-to-market loss on long-duration products.
The report highlighted Ameriprise Financial's decision to retain its long-term care insurance book rather than reinsuring it to mitigate exposure as a key factor in today's stock performance. The analyst suggested that the current market weakness presents an opportunity to increase positions in Ameriprise Financial, citing the company's consistent above-peer revenue growth and a return on equity (ROE) of 56.8%, which stands out against a peer average of about 20%.
In summary, despite the company trading at a 15% discount to its peers, the analyst believes this undervaluation is unwarranted given Ameriprise's strong financial results and growth prospects. Year-to-date revenues for Ameriprise have increased by 12% year-over-year, surpassing the forecasted 7%-12% rise.
In other recent news, Ameriprise Financial has reported significant growth in its Q3 2024 earnings call. The company's assets under management and administration rose by a substantial 22% to reach $1.5 trillion. The adjusted operating net revenue also witnessed an 11% increase to reach $4.4 billion, and earnings per share grew by 17%, excluding severance expenses. The return on equity was robust at 50.7%, marking an increase from last year's 49.6%.
In addition to these developments, Ameriprise Financial has plans to introduce new savings and lending products. The company aims to return 80% of capital to shareholders in 2024, with similar expectations for 2025. Despite improvements, the Asset Management segment experienced net outflows of $2.4 billion. However, the Wealth Management segment achieved record client assets, with net inflows over the past year totaling $46 billion.
InvestingPro Insights
Complementing CFRA's bullish outlook on Ameriprise Financial (NYSE:AMP), recent data from InvestingPro provides additional context to the company's financial performance and market position. As of the last twelve months ending Q2 2024, AMP reported a robust revenue of $16.96 billion, with a notable revenue growth of 12.55%. This aligns with the analyst's observation of Ameriprise's above-peer revenue growth.
The company's strong financial health is further evidenced by its impressive operating income margin of 35.6% for the same period. This high profitability metric supports the analyst's emphasis on Ameriprise's superior return on equity compared to its peers.
InvestingPro Tips highlight that Ameriprise has raised its dividend for 19 consecutive years, demonstrating a commitment to shareholder returns that aligns with its strong financial performance. Additionally, the company's liquid assets exceeding short-term obligations suggest a solid financial foundation, which may contribute to investor confidence in the face of market fluctuations.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Ameriprise Financial, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.