Zacks Investment Research upgraded shares of Invesco Ltd. (IVZ) from UNDERPERFORM to NEUTRAL on October 03, 2012, with a target price of $26.00.
We are upgrading our recommendation on Invesco to Neutral based on the recent rise in assets under management (AUM) along with gradually stabilizing equity markets. However, the company's second quarter 2012 earnings marginally missed the Zacks Consensus Estimate. Results were adversely impacted by lower net revenue, partially offset by slightly lower operating expenses. We expect operating leverage to improve significantly over the long term due to its cost-control initiatives. Also, meaningful capital deployment activities will enhance shareholders' confidence in the stock. However, volatile U.S. dollar, higher level of debt and increasing competition remain matters of concern. Overall, we believe that the company is well-positioned to benefit from improved global investment flows, resulting from its broad diversification.
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