AMP Limited shares slump again: Has value emerged?

On Thursday the share price of the $16 billion wealth management giant AMP Limited (ASX: AMP) slumped 5.3% to $5.51 after the group released its first quarter cashflows and Assets Under Management (AUM) figures along with a disappointing update on its Australian Wealth Protection division.

The shares have continued to sell-off on Friday with the stock down another 1.5% in afternoon trade to $5.43.

Here are the key points from yesterday’s announcement:

  • According to CEO Craig Meller “domestic and global investment market conditions continued to be challenging during the first quarter, subduing cashflows across our business.”
  • Net cashflows in the Australian wealth management division fell to $209 million from $342 million in the prior corresponding period. Weaker investor confidence, ongoing market volatility and advisers adjusting to an enhanced regulatory environment were cited as contributory factors to the cashflow slump.
  • Total AUM declined by 2% to $112.6 billion on the prior quarter primarily due to negative investment market movements.
  • AMP Capital experienced net cash outflows of $1.54 billion.
  • The Australian wealth protection business was impacted by claims experience losses of $18 million, with the majority of the losses being in retail income protection across incidence and termination.

Value emerging?

Investors will have to wait a few more days to get a clear picture on what brokers and their analysts think of the latest update.

According to an ABC news report, investment bank UBS has already downgraded the stock from a “buy” recommendation to “neutral” and lowered its price target to $5.50 from $6.30.

With consensus earnings forecasts possibly at risk, and more broker downgrades likely, investors may be best off waiting on the sidelines for the time being.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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