Shares in financial services giant AMP Ltd (ASX: AMP) edged 1.73% lower today to finish trading in the red at $1.14.
That continues an extended run into the red for AMP, having lost 3% this past week, and a further 27% this year to date.
The question on everyone's mind is whether or not AMP shares can recover to their 2018 highs of over $5 a share. So – is there still hope for the AMP share price?
What are the experts saying?
Analysts at investment bank JP Morgan reckon the funds from the sale of AMP's 19% stake in Resolution Life may be actually needed to separate AMP from AMP Capital.
Whilst it acknowledges this isn't a poor use of the funds, the firm is worried there may be leakages and inefficient use of capital, especially given AMP's current legal troubles.
The firm says that "[its] concern is some capital may disappear to service other needs, for example class actions".
It also states that the prospects for AMP rest in "being able to stabilise AMP AWM, successfully split Private markets without too many dis-synergies, grow the bank and resolve class actions / regulatory issues without much additional cost".
Jarden Securities agrees with its fellow broker and also cautions investors about betting on AMP's return to glory in the short term.
The broker also acknowledges that the sale of Resolution will beef up AMP's balance sheet. In fact, it will probably boost its liquidity to $911 million, according to Jarden.
However, "with the transaction not due to settle until next year at least", plus "an AMP capital demerger still ahead and strategic growth plans under its new CEO to be unveiled", the firm says, "we believe capital management is unlikely to feature before August 2022, resulting in an FY22 EPS drag ahead of potential outer year offsets".
Both Jarden and JP Morgan retain a neutral rating and $1.20 price target on the AMP share price. This is hardly inspiring, considering it implies an upside potential of just 6 cents per share.
Macquarie recently upped its valuation on AMP to $1.12 per share after restarting coverage on the company back in October at $1.10. The average price target on the group of analysts covering AMP is $1.26.
AMP Share price history
It's been a long-winded roll downwards for AMP investors and their shareholdings since 2018. In that time, the company has lost over $5 per share or 77% in value.
AMP's implication in the Royal Commission into Financial Services, where it admitted to reprehensible conduct, first started the steady decline in its share price.
In the Royal Commission, AMP was scolded for a number issues, including its poor financial advice practices. APRA imposed various conditions on the company from 2019 in response to the findings. However, AMP have also self-reported a number of issues since the hearing as well.
Since then it has also been embroiled in a number of follow-up and separate investigations which have only added more pressure from the top.
Most recently it settled $40 million in rectification and remediation costs after finalising a set of matters with APRA in regards to its superannuation business.
Over the past 12 months, the AMP share price is down 35%. However, it has regained some steam this past month and is slightly ahead of the S&P/ASX 200 Index (ASX: XJO), up 0.89% in comparison to the benchmark's 0.21%.
