Invesco (IVZ) Boosted by Smart Acquisitions/Conservative Style - Barron's

Asset management firm Invesco (NYSE: IVZ) is the largest unheard of name on Wall Street, a Barron’s article reports today. Current AUM totals about $419 billion.

Although they don’t have a brokerage operation, Invesco CEO Martin Flanagin is staging to expand their profile by offering up more investment products and improving overall performance.

Analysts see Invesco shares, currently trading at $21.92, to get a 41% boost to $31 or more. Invesco has a historic 16x FY10 earnings multiple, at the lower end of its 15 – 20x average.

Invesco has made some notable acquisitions over the years; one that stand’s out is the acquisition of W.L. Ross & Co. Wilbur Ross is adding value to Invesco with his knowledge of textiles, coal, steel, autos, and financial services.

The company gets a huge boost by gaining access to Morgan Stanley-Smith Barney brokers through the $1.5 billion purchase of Morgan Stanley/Van Kampen business. Invesco expects a boost of 11% in earnings, but analysts see a boost of 15% or more from the acquisition. Total assets will increase to $538 billion on the acquisition. Flanagan believes that a firm does need to be big to stay at the top of the market.

Tight management controls saved some face for Invesco at the end of 2008, avoiding investment in mortgage-backed products and having about 40% of their clientele based outside the U.S.

Flanagin sees growth of the company in their U.S.-based funds for the next 12 – 18 months.

An analyst from Sandler O'Neill & Partners has a price target of $31, based on FY10 EPS of $1.31. The analyst also sees FY11 EPS of $1.67.

You May Also Be Interested In