On Thursday, CFRA maintained their Hold rating on Franklin Resources (NYSE:BEN) but increased the price target on the shares from $28.00 to $30.00. The adjustment reflects a valuation based on projected earnings per share for future fiscal years, with the new target price representing a multiple of 10.5 times the forecasted FY26 EPS of $2.87, 11.3 times the FY25 EPS of $2.65, and 12 times the FY24 EPS of $2.50.
The firm's analysis compares Franklin Resources' forward multiple to its three-year average of 9.7 times and the broader asset management and private equity peer group average of 16.6 times. The analyst anticipates that after a 5% revenue decline in FY23, Franklin Resources' revenues will stabilize, with projections ranging from flat to an increase of up to 5% in FY24 and FY25.
Despite the company's history of acquisitions that have the potential to enhance its revenue growth, CFRA does not expect significant organic revenue growth. This is attributed to ongoing asset outflows, including $17 billion in FY23 and $28.6 billion in FY22. The report suggests that these outflows continue to challenge the company.
The analyst concluded that the stock's current valuation, when weighed against Franklin Resources' below-average fund flow trends and a dividend yield of 4.5%, renders the shares fairly valued in the market. This evaluation takes into account the company's performance compared to its industry peers and its financial prospects in the coming years.
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