It's been a tough month for AMP Ltd (ASX: AMP) shares.
How tough?
Well one month ago, on 12 February, shares in the S&P/ASX 200 Index (ASX: XJO) diversified financial services company closed the day trading for $1.76. That saw shares up more than 32% over the preceding six months.
But two days later, on 14 February, things took a decided turn for the worse when the ASX 200 stock closed down a precipitous 14.9%, ending the day at $1.49 a share. This followed the release of AMP's full-year 2024 results.
Yesterday, AMP shares closed changing hands for $1.25 apiece. This sees the share price down 28.69% over the past month.
Longer term, shares remain up 14% over 12 months. AMP stock also trades on a 2.4% partly franked dividend yield.
Looking at the year ahead, however, Red Leaf Securities' John Athanasiou believes the downside risks for AMP outweigh the potential upside for investors (courtesy of The Bull).
Time to sell AMP shares?
"The share price of this diversified financial services company plunged recently after posting disappointing fiscal year 2024 results," said Athanasiou, who has a sell rating on AMP shares.
The first reason he's bearish are those disappointing results.
"Statutory net profit after tax of $150 million fell by 43.4% on the prior corresponding period. Total revenue of $1.252 billion was down 1.1%," he said.
The second reason is that the 50% year on year final dividend cut could scare off ASX passive income investors.
"The company cut its final dividend from 2 cents last year to 1 cent this year, making it less appealing to income investors," Athanasiou said.
And the third reason to sell AMP shares relates to the ongoing restructuring of the company's business.
"Although AMP is repositioning itself as a retirement specialist and digital bank, the business faces ongoing restructuring challenges and rising costs," Athanasiou said. "Given weaker profitability and reduced yield appeal, downside risks outweigh potential upside, in our view."
Why did AMP's 2024 profits take such a big hit?
The 43.4% plunge in full year 2024 statutory NPAT that put AMP shares under selling pressure was driven by costs related to the company's business simplification spend along with the loss it incurred on the sale of its Advice business. The company completed its AMP Advice transaction on 2 December.
Management also noted that 2023's statutory NPAT reflected the gains AMP booked on the sale of AMP Capital and SuperConcepts that year.
Commenting on his outlook for AMP shares in 2025 following on the results announcement, CEO Alexis George said:
Having successfully completed the Advice transaction in December 2024, AMP is positioned to drive growth and build on opportunities in our wealth businesses to become a pre-eminent retirement specialist, and as a leading digital bank.
