Why this top broker says the AMP share price is 27% over-valued

The ASX 200 wealth manager’s assets under management declined in the first quarter of 2022.

| More on:
ASX expensive defensive shares man carrying large dollar sign on his back representing high P/E ratio or dividend

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The AMP Ltd (ASX: AMP) share price is down 0.7% in afternoon trading.

AMP shares closed yesterday at $1.16 and are currently trading for $1.15.

But even with that dip, analysts at UBS believe the S&P/ASX 200 Index (ASX: XJO) listed wealth management company is 27% overvalued.

What is the UBS price target?

Analysts at the leading broker have retained their sell rating on AMP shares.

They reported that AMP’s funds under management update, released last Thursday, was in line with their expectations. However, AMP’s assets under management were below expectations.

The company’s Australian Wealth Management segment’s assets under management declined to $136.5 million in Q1 2021, down from $142.3 million in Q1 2021. The fall was due to a combination of outflows and investment losses.

Citing concerns over a structural deterioration in the AMP’s core wealth business, UBS analysts believe the AMP share price is lofty. UBS has a 90 cent price target on the company’s shares.

That’s just over 27% below the current price of $1.15.

AMP share price snapshot

Whether AMP shares will retrace 27% in line with the expectations of UBS analysts remains to be seen.

We do know that, so far in 2022, the ASX wealth manager has been handily outperforming.

Year-to-date the AMP share price has gained 15.2%. That compares to a loss of 7.2% posted by the S&P/ASX 200 Index (ASX: XJO).

AMP also pays a 3.1% trailing dividend yield, 90% franked.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

Three colleagues stare at a computer screen with serious looks on their faces.
Dividend Investing

Here are 3 ASX financial shares going ex-dividend this week

Let's check out some funds going ex-div this week.

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format
Financial Shares

Broker names 2 ASX 200 financials shares to buy

These financials shares could be in the buy zone according to a broker...

Read more »

A man thinks very carefully about his money and investments.
Financial Shares

Macquarie share price slips amid move to fortify war chest by $400 million

Macquarie is raising funds. Here's how...

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated by ASX shares news articles especially one about the Bannerman Energy share price
Financial Shares

Down 10% in a month, here’s the latest for the AMP share price

AMP shares are taking a breather after tumbling 10% in a month.

Read more »

AMP share price demergerThree zigsaw pieces pulled apart to symbolise a demerger
Financial Shares

Suncorp share price lifts on demerger plans

Suncorp shares extend a relief rally today.

Read more »

A man in a business suit holds his coffee cup aloft as he throws his head back and laughs heartily.
Financial Shares

Latitude share price launches 19% in first major gain since scrapped Humm deal

The stock is rebounding on Friday.

Read more »

A man analyses stockmarket graph on his computer.
Financial Shares

Is the Challenger share price cheap after sliding 13% in a month?

Challenger shares have had a rough month. Time to buy?

Read more »

A woman sitting in her lounge room punches the air in a gesture of success, having seen the rising IAG share price on her laptop
Financial Shares

Why did the IAG share price surge 5% on Thursday?

The insurance stock has bounced back from a recent 10-year low.

Read more »