T. Rowe Price Group (TROW) surpassed Q2 earnings and revenue estimates on solid growth in assets under management (AUM) during the quarter. However, shares of the investment management company fell 1.4% in pre-market trading session after it cautioned that it expects expenses in 2021 to increase in the range of 12-15%, up from 10-14% previously expected.
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The change in guidance is a result of T. Rowe’s partnership with Fidelity National Information Services (FIS).
Quarterly adjusted earnings came in at $3.31 per share, above the analyst’s expectations of $3.16 per share. Also, it increased 44.5% from $2.29 per share reported in the last year’s quarter.
The company reported net revenues of $1.93 billion, up 36.3% from the year-ago period, surpassing consensus estimates of $1.88 billion. Notably, T. Rowe earned investment advisory fees of $1.79 billion, up 38.1% year-over-year. (See T. Rowe stock charts on TipRanks)
Q2 AUM came in at $1.62 trillion, up 33% year-over-year. During the reported quarter, AUM benefitted from net market appreciation and gains of $105.7 billion, partly offset by net outflows of $0.6 billion.
On July 13, Jefferies analyst Daniel Fannon assigned a Buy rating to the stock with a price target of $230 (15.3% upside potential from current levels). The analyst expects T. Rowe to deliver earnings per share of $3.20 in Q3.
Based on 2 Buys, 4 Holds and 1 Sell, the stock has a Hold consensus. The average T. Rowe price target of $196.14 implies 1.4% downside potential from current levels. Shares have gained 7.2% over the past year.
According to TipRanks’ Smart Score system, TROW gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.
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