On Monday, TD Cowen maintained a Hold rating on shares of Franklin Resources (NYSE:BEN), with a slight increase in the price target to $24 from $23. The adjustment reflects an anticipation of improved long-term fund flows in the second half of 2024, despite some concerns about the company's operating leverage after factoring in the cost of recent back-office initiatives.
The firm's analyst noted that while the stock has experienced a significant decline, approximately 23% year-to-date, the earnings forecast for fiscal years 2024 and 2025 remains relatively unchanged. This stability in earnings projections, coupled with the stock's recent performance, suggests a more favorable risk/reward balance for Franklin Resources.
Franklin Resources' fee rate is expected to stay relatively stable, as the impact of incoming and outgoing fund flows balance each other out. This stability is a key factor in maintaining the Hold rating, as it indicates a steady state of financial performance for the company.
The updated price target of $24 represents a modest increase and is indicative of a cautiously optimistic outlook for the company's financial future. The analyst believes that, despite the challenges, there is potential for improvement in the company's long-term fund flows as the year progresses.
In other recent news, Franklin Resources has been under the microscope of several analyst firms, with BMO Capital, TD Cowen, and BofA Securities adjusting their outlooks on the company. BMO Capital lowered its price target for Franklin Resources to $26, highlighting concerns about the company's financial performance approaching fiscal 2025, specifically regarding fee rate compression and only gradual margin improvement.
TD Cowen and BofA Securities also reduced their price targets to $25.50 and $23.00, respectively, maintaining their hold and underperform ratings.
The company also maintained its quarterly cash dividend at $0.31 per share, marking a 3.3% increase from the dividend paid in the same quarter of the previous year. These are among the recent developments for Franklin Resources.
In the realm of digital assets, Franklin Templeton, along with several other financial institutions, launched the first U.S. exchange-traded funds (ETFs) tied to ether. This significant milestone is seen as a crucial step in integrating digital assets into the broader financial sector. The ether ETFs feature fees ranging from 0.19% for Franklin Templeton's offering to 2.5% for Grayscale's ethereum trust.
InvestingPro Insights
For investors considering Franklin Resources (NYSE:BEN), current InvestingPro data provides a mixed picture. The company's market capitalization stands at $11.81 billion, with a P/E ratio of 14.39, reflecting market sentiment and valuation. Notably, Franklin Resources has a history of consistent dividend payments, having maintained them for 44 consecutive years, and currently offers a dividend yield of 5.37%. This could be an attractive point for income-focused investors, especially in light of the company's liquid assets surpassing short-term obligations, suggesting financial stability.
On the performance front, Franklin Resources has demonstrated profitability over the last twelve months, with a gross profit margin of 38.75%. Despite this, analysts have revised their earnings downwards for the upcoming period, and the stock is trading at a high P/E ratio relative to near-term earnings growth, which might raise concerns about future valuation. As of the latest data, the company's shares are trading at 76.12% of their 52-week high, with a previous close price of $23.08.
Investors looking for a deeper dive into Franklin Resources can find additional InvestingPro Tips, which provide further insights into the company's financial health and performance forecasts. There are currently 5 more InvestingPro Tips available for Franklin Resources, which can be accessed with a subscription. To enrich your investment decision-making, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/BEN.
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