Invesco Q413 Analysis: Key Clients To Remain Invested

BMO Capital Market analyst David J. Chiaverini and Richard Fellinger reiterate their Market Perform rating on Invesco Ltd. (NYSE:IVZ), below is their latest report.


Invesco 4Q13 earnings

Invesco Ltd. (NYSE:IVZ) reported 4Q13 adjusted EPS of $0.58 (BMO $0.55, cons. $0.57).

Impact & analysis

P&L results were largely in line with our estimates, and the beat resulted from a lower than-expected tax rate and share count (management stepped up repurchases to $350mm in the quarter above our $50mm estimate). Longterm net inflows of $1B (+$0.3B active, +$0.7B passive) were much better than our estimate of $4B of outflows

In a stark contrast to recent trends, institutional flows (+$1.3B) outpaced retail (-$0.3B) in the quarter, as real estate and bank loan products continue to sell well in the institutional channel. All-in, alternative strategies (+$2.5B) saw the largest inflows during the quarter. Key takeaways include 1) following the announcement that Neil Woodford would be leaving (from Oct 15 to year-end), UK Equity Income had $4.8B of outflows, and management is optimistic existing clients will remain invested in the fund (or at least the franchise) including one public assurance from the Edinburgh Investment Trust (~$2B USD of AUM);

we continue to model $20B of outflows from the strategies as Woodford’s official departure date is at the end of April; 2) new product development was strong as Invesco Ltd. (NYSE:IVZ) launched more funds during the three months than any full calendar year over the past five years; strategies include the Global Total Return Funds and an expanded product suite in China; and 3) flows in balanced funds continue to struggle with $1B of outflows in 4Q13; increasing interest in risk-based assets is negatively affecting IBRA products.

Valuation & recommendation

Our 2014/2015 adjusted EPS estimates are unchanged at $2.40/$2.70. Our $36 price target is based on a sum- of- the- parts valuation (see page 2). We maintain our Market Perform rating owing to the remaining uncertainty surrounding Woodford’s upcoming departure.


Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Are you an intelligent investor?

ValueWalkPremium is a website and newsletter for smart investors like yourself. We focus on the latest hedge fund industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers