Invesco Faces Challenges with AUM Pressure and Fee Rate Decline, Earning a Sell Rating

Michael Brown, an analyst from Wells Fargo, maintained the Sell rating on Invesco (IVZ – Research Report). The associated price target remains the same with $19.50.

Michael Brown has given his Sell rating due to a combination of factors affecting Invesco’s financial outlook. Despite some positive developments, such as a slight reversal in the mix shift towards low- and no-fee products, the overall pressure on assets under management (AUM) and the risk of outflows in March overshadow the favorable February results. The firm’s long-term net inflows were moderate and expected, with non-ETF flows merely breaking even, indicating challenges in offsetting U.S. mutual fund outflows.
Additionally, the ongoing decline in fee rates poses a significant concern. The trend of shifting towards lower-fee products, primarily ETFs, suggests continued compression in net revenue yield, which could hinder revenue growth. Although there is potential in private markets and APAC managed assets to slow this downtrend, the overall growth in these areas remains modest. This combination of factors contributes to the cautious outlook and the Sell rating on Invesco’s stock.

Brown covers the Financial sector, focusing on stocks such as Stifel Financial, Invesco, and KKR & Co. According to TipRanks, Brown has an average return of 12.0% and a 60.49% success rate on recommended stocks.