On Apr 2, 2013, we reiterated our long-term recommendation on Franklin Resources Inc. (BEN) at Neutral. The affirmation is based on Franklin’s long- term growth prospects as well as better-than-expected fiscal first quarter results. Yet, increased regulatory restrictions and sluggish economic recovery could dent assets under management (AUM) growth.
Why the Neutral Stance?
Franklin has been growing strategically and expanding its foothold though acquisitions. Over the last few quarters, the company has completed a few acquisitions and stake buys, thus diversifying product offerings in key markets and providing the finest investment options to satisfy growing investors' need. Moreover, the company’s portfolio of diverse and innovative investment products provides it with an edge over its competitors.
Additionally, Franklin’s fiscal first quarter (ended Dec 31) outpaced the Zacks Consensus Estimate by 1.7%. Better-than-expected results were primarily driven by its top line growth, partly offset by an increase in operating costs. Moreover, increased level of AUM was a tailwind for the quarter.
Following the fiscal first-quarter results, the Zacks Consensus Estimate for fiscal 2013 inched up about 1% to $9.97 per share over the last 60 days. Likewise, the Zacks Consensus Estimate for fiscal 2014 advanced 1.4% to $11.23 per share in the same time frame. Hence, Franklin now has a Zacks Rank #2 (Buy).
Other Stock Worth Considering
Although we prefer Franklin, there are other investment management stocks worth a look. These include Lazard Ltd. (LAZ), Ameriprise Financial Inc. (AMP) and BlackRock, Inc. (BLK). While the first stock carries a Zacks Rank #1 (Strong Buy), the other two retain a Zacks Rank #2 (Buy).
AMERIPRISE FINL (AMP): Free Stock Analysis Report
FRANKLIN RESOUR (BEN): Free Stock Analysis Report
BLACKROCK INC (BLK): Free Stock Analysis Report
LAZARD LTD (LAZ): Free Stock Analysis Report
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