Investment management firms Invesco Ltd. (NYSE:IVZ) and AllianceBernstein Holding LP (NYSE:AB) got an equal weight rating from Morgan Stanley (NYSE:MS).


Matthew Kelley and the team at Morgan Stanley also view Franklin Resources, Inc. (NYSE:BEN)’s announcement of enhanced quarterly dividend as positives for BEN.

Invesco retains equal weight

Morgan Stanley analysts view Invesco as a global, diversified platform that is likely to generate organic growth over most of its peers. The analysts remain ‘equal-weight’ on Invesco Ltd. (NYSE:IVZ) as they consider Invesco’s consistently strong positive operative leverage as the most significant positive catalyst going forward.

The analysts point out that Invesco Ltd. (NYSE:IVZ) inflows are tracking ahead of estimates. Morgan Stanley analysts anticipate continued strong growth in International fund range of about 30% of AUM managed for International clients, including cross-border funds.

They anticipate +$0.1 billion of net long-term inflows for Invesco Ltd. (NYSE:IVZ) in November and +$3.1 billion quarter-to-date above their full quarter estimate of +$2.2 billion. The analysts’ estimate includes inflows of +$0.7 billion into alternatives and +$0.3 billion into equity. Despite not having complete data for Perpetual-fund for November, the analysts anticipate Perpetual outflows would likely decline against October’s.

Morgan Stanley analysts note continued inflows would act as a key value driver for Invesco Ltd. (NYSE:IVZ) though they anticipate fixed income and IBRA to slow against strong levels from prior quarters.

The analysts anticipate stronger margin expansion and EPS growth than most peers, though they remain equal-weight and believe investors would price Invesco Ltd. (NYSE:IVZ) at a discount until it consistently shows these combined factors.

The following table depicts Morgan Stanley analysts’ estimates and price target for Invesco Ltd. (NYSE:IVZ):

IVZ estimates

AB’s price target pegged at $23

Matthew Kelley and team at Morgan Stanley (NYSE:MS) assign ‘equal-weight’ for AllianceBernstein Holding LP (NYSE:AB) as they view risk/reward as balanced, with discount valuation against peers justified given about 4% annual outflows witnessed in latest quarter.

The analysts anticipate -$0.7 billion of net long-term outflows for AllianceBernstein Holding LP (NYSE:AB) in November and -$9.4 billion quarter-to-date including $7 billion redemption in October. The analysts point out such outflows are in line with their estimates of -$10.7 billion.  The analysts note institutional net flows of about +$1.0 billion as the biggest positive for AllianceBernstein, after three straight monthly outflows. However, the analysts point out retail outflows of about -$1.5 billion driven by Global High Yield and American Income remain a key challenge for AB.

Morgan Stanley (NYSE:MS)  analysts believe AllianceBernstein Holding LP (NYSE:AB)’s continued build-out of fixed income product platform and retaining AUM originated in non-US retail channels would be key to offsetting its equity outflows.

The following table captures Morgan Stanley analysts’ estimates and price target for AllianceBernstein Holding LP (NYSE:AB):

AB esimates

Morgan Stanley analysts in their recent report note Franklin Resources’ recent announcement of a +24% year-on-year increase in its quarterly dividend to 12c and additional 30 million share repurchase authorization as positives. However, the analysts point out some investors may be disappointed in the lack of a special dividend declaration from Franklin Resources, Inc. (NYSE:BEN). They point out Franklin Resources had declared special dividend in each of the past two years and three of the past four.