Citi analysts have been of the view that, at best, AMP is looking forward to a long road to recovery, and that view hasn’t changed. Hence why the rating remains Sell/High Risk. Estimates have been lowered post the release of FY19 financials.
Management’s guidance for a flat underlying profit this year translates to -5% fall, explain the analysts. A few factors are helping management, the analysts point out, including more of the profit will be coming from investment earnings booked at above market returns.
Citi suspects while prospects are improving for the bank and AMP Capital, earnings for AMP Wealth Management may not bottom until FY21. Significant revenue margin squeeze is expected in the medium term. Target price unchanged at $1.70.
Sector: Insurance.
Target price is $1.70.Current Price is $1.86. Difference: ($0.16) – (brackets indicate current price is over target). If AMP meets the Citi target it will return approximately -9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
