Bank of America Securities analyst Craig Siegenthaler has reiterated their bearish stance on BEN stock, giving a Sell rating yesterday.
Craig Siegenthaler has given his Sell rating due to a combination of factors impacting Franklin Resources. The company reported a higher-than-expected adjusted EPS for the first quarter of 2024; however, the increase was attributed to lower-quality revenue streams, such as catch-up and performance fees, rather than more sustainable sources. Furthermore, Franklin Resources experienced operational challenges, with the operating margin dropping to its lowest level since December 2022, largely due to increased deferred compensation costs. The analyst also notes concerns about the company’s tax rate and non-operational income contributing to the earnings beat, suggesting that underlying financial health may not be as robust as the EPS suggests.
Additionally, Siegenthaler points to troubling long-term net outflows, particularly in fixed income, which indicates ongoing challenges in asset retention and growth. Despite positive inflows in alternative assets, multi-asset, and equities, the outflows in fixed income were significant enough to raise concerns about the overall flow of funds. While acknowledging Franklin Resources’ efforts to expand into growth areas such as private markets and its potential to benefit from industry consolidation, the expectation is for traditional product outflows to persist in the near term. Moreover, alternative asset flows are likely to decline following the completion of two major fund-raisings, leading to the reiteration of the Underperform rating.
In another report released yesterday, KBW also maintained a Sell rating on the stock with a $27.00 price target.
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Based on the recent corporate insider activity of 44 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BEN in relation to earlier this year.
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Franklin Resources (BEN) Company Description:
Franklin Resources, Inc. is a holding company, which engages in the provision of investment management and related services. It offers its products and services under the brands of Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2, LibertyShares, and Edinburgh Partners. The company was founded by Rupert H. Johnson, Sr. in 1947 and is headquartered in San Mateo, CA.
Read More on BEN:
- Franklin Resources Publishes Q1 Earnings Commentary Online
- Options Volatility and Implied Earnings Moves Today, January 29, 2024
- BEN Upcoming Earnings Report: What to Expect?
- Franklin Resources price target raised to $24 from $22 at Morgan Stanley
- Franklin Resources reports preliminary AUM of $1.46T at December 31
