Next month’s ASX profit reporting season should be a relatively pleasing one. But there’s one large cap stock that’s facing the pump.
The ASX stock in the hotseat is the AMP Limited (ASX: AMP) share price, but it isn’t for what you might think!
It’s not so much profits but progress on its restructuring that will be dogging management in February.
Clock ticking on AMP share price
Citigroup believes AMP is running out of time to show progress. And that the best way for the embattled wealth manager to create value is to sell some of its key assets.
Macquarie Group Ltd (ASX: MQG) is touted as the most likely buyer. But after its acquisition of Waddell & Reed Financial, Australia’s home-grown investment bank may have too much on its plate to make a bid.
“Still, this is the business which likely most attracts current conditional bidder Ares (at least in part), with Macquarie (and possibly others) still potentially interested in AMP Bank,” said Citi.
“Consequently our proposed route of spinning off these two businesses, realising substantial capital and retaining the harder to sell, but heritage, AWM business may still be possible.
“This would also leave AMP still in control of its ultimate destiny, something we presume the AMP Board would find attractive.”
February reporting season fast approaches
However, the clock is ticking. The broker believes the market may be running low on patience unless management can unveil some concrete plans with its upcoming results.
After all, investors have already been waiting four months. That’s from the time AMP announced it strategic review.
There’s a lot riding on the next update as it will likely trigger a sharp rally or a painful correction in the AMP share price.
AMP share price on edge
“As our current Positive Catalyst Watch indicates we continue to flag potential share price upside if the portfolio review is resolved positively,” added the broker.
“However, we continue to flag downside risk if the outcome of the portfolio review is that no bid eventuates and the status quo is maintain.”
Other M&A transactions to watch
AMP isn’t the only one under the merger and acquisition (M&A) spotlight, although it’s arguably under the most pressure to announce a favourable outcome.
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