On Thursday, TD Cowen maintained a Hold rating on Franklin Resources (NYSE:BEN), with a consistent price target of $24.00. The firm's assessment followed the company's release of its assets under management (AUM) as of August 31, which presented a complex picture due to affiliate-level dynamics.
The update revealed a mixed situation, with the management providing additional details regarding the Western Asset Management Company (WAMCO) amid ongoing investigations by the SEC and the DOJ. These investigations have led to increased attrition but have left the AUM relatively stable. Excluding the impact from these investigations, the long-term flows remained approximately break-even.
Franklin Resources' recent disclosure indicated that the company is navigating through some operational challenges. Despite the hurdles presented by the investigations into WAMCO, the core AUM has been reported to remain relatively unaffected. The company's ability to maintain stable AUM in the face of potential outflows due to the investigations has been noted by TD Cowen.
The firm's commentary pointed out that the market might react positively to Franklin Resources' latest financial update. TD Cowen anticipates that the stock could experience an uptick in trading on Thursday based on the current assessment of the company's financial flows and the ongoing situation with WAMCO.
Franklin Resources' stock performance on Thursday and in the days to follow will provide a more concrete indication of investor sentiment following the company's AUM announcement and the additional details provided about the WAMCO situation.
In other recent news, Franklin Resources, operating under the brand Franklin Templeton, has been the subject of various financial developments. The investment management company reported an adjusted operating income of $424.9 million in a recent earnings call, marking a 1.3% increase from the previous quarter. The firm also recorded a 15% year-over-year increase in assets under management, concluding the quarter with $1.65 trillion.
In the wake of an SEC inquiry and the departure of Ken Leech from Western Asset Management, Franklin Templeton closed its $2 billion Macro Opportunities fund. Michael Buchanan has since been appointed as the sole chief investment officer of Western Asset Management.
Analyst firms have been active in their coverage of Franklin Resources. Barclays (LON:BARC) initiated coverage on the company, assigning an Underweight rating with a price target of $20.00, citing ongoing challenges in its active equities and fixed income segments.
TD Cowen maintained a Hold rating on the company, raising the price target to $24, while BMO Capital lowered its price target to $26 due to concerns about the company's financial performance.
In the realm of digital assets, Franklin Templeton, along with several other financial institutions, launched the first U.S. exchange-traded funds tied to ether. The company also maintained its quarterly cash dividend at $0.31 per share, a 3.3% increase from the same quarter of the previous year.
InvestingPro Insights
Franklin Resources (NYSE:BEN) presents a unique opportunity for investors looking for stability in dividends and potential value. According to InvestingPro data, Franklin Resources boasts a market capitalization of $10.17 billion and a P/E ratio of 12.02, suggesting a moderate valuation in the current market. Notably, the company's P/E ratio adjusted for the last twelve months as of Q3 2024 is even more attractive at 9.29. This could indicate that the stock is undervalued relative to its earnings potential.
InvestingPro Tips highlight that Franklin Resources has a strong history of dividend payments, having maintained them for 44 consecutive years, with a current dividend yield of 6.38%. This demonstrates a commitment to returning value to shareholders. Additionally, with liquid assets surpassing short-term obligations, the company shows financial stability, which may reassure investors during uncertain economic times. For those seeking further insights, InvestingPro offers additional tips on Franklin Resources, which can be accessed at https://www.investing.com/pro/BEN.
While the stock has experienced a significant decline over the last six months, with a 6-month price total return of -28.4%, it currently trades near its 52-week low. This could represent a potential entry point for value investors, especially considering analysts predict the company will remain profitable this year. With Franklin Resources' next earnings date on October 29, investors will be watching closely to see if the company can continue to navigate its challenges while providing shareholder value.
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