The AMP Ltd (ASX: AMP) share price has been on form at long last in 2024.
Since the start of the year, the financial services company's shares have risen approximately 68%.
This means it is significantly outperforming the ASX 200 index, which is up almost 11% over the period.
But what's next for the company's shares? Let's see what analysts at Goldman Sachs are saying about this high-flying stock.
Where next for the AMP share price?
According to the note, the broker has initiated coverage on AMP this morning and revealed that it has been impressed with the company's turnaround.
However, Goldman still thinks the company's Platforms business has a few things to prove until it will be more positive. It said:
We think AMP's recovery in Platforms is still in its early stages with further evidence of a consistent improved trajectory of inflows and net inflows required before we get more positive. The sale of the advice business to Entireti we think presents some risk of outflows albeit AMP is managing adviser relationships through licensee fee incentives.
But if it does deliver on this then the AMP share price could be due a re-rating. Especially when you compare current multiples to those of Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL). It adds:
P/E Valuations of NWL / HUB demonstrate the upside opportunity for AMP: which we think could potentially be derived from a sustained turnaround in netflows.
Initiating at neutral
The note reveals that Goldman Sachs has initiated coverage on the AMP share price with a neutral rating and $1.54. This is largely in line with where its shares trade today. It said:
Valuation looks fair in line with our DCF and SOTP at close to 15x 1 year forward – we see upside risk from a stronger recovery in Platform flows / Bank trends / Minority stakes.
Goldman also added a bit more colour on its recommendation. It adds:
We are Neutral rated on AMP. We like AMP because: 1) Further opportunity for capital release to support capital management outside of dividends and potential monetization of equity stakes. 2) Stronger focus on cost out which is expected to play out over the next few years. 3) Legacy issues are being resolved albeit some remnant risks remain.
However, we are cautious on 1) Sustainability of flows and AMP's ability to compete with NWL/HUB which are gaining market share, despite improving flows profile in Platforms. 2) Bank remains challenged with elevated CTI, significant NIM pressures and weak growth. 3) Valuation looks fair and in line with our DCF and SOTP.
