The AMP Ltd (ASX: AMP) share price is trading in the red on Tuesday morning. At the time of writing the shares are 0.71% lower at $1.75 a piece.
The shares have jumped an impressive 60.3% since they hit a 12-month low in April this year. AMP's shares are now 20.48% higher than 12 months ago.
The fund manager released its third-quarter update in mid-October which saw its share price drop for the day. At the time, broker Macquarie Group Ltd (ASX: MQG) raised its target price on the stock, and now, just over two weeks later, the broker has changed its outlook again.
New price target for AMP shares
In a new note to investors, Macquarie confirmed its neutral rating on AMP shares. But it has raised its target price to $1.92, up from $1.80 in mid-October.
At the time of writing, the new target price represents a potential 9.9% upside for investors over the next 12 months. That's significantly higher than the 0.6% upside available, based on Macquarie's previous price target.
"Earnings changes: FY25E: +3.6%; FY26E: +7.6%; reflecting remodelling of the Chinese partnerships within Corporate Expenses," the broker said in its note.
Neutral. To become more bullish we need to see a live walk-through of the "best in class technology platform.
Valuation: Our 12-month price target to $1.92 (from $1.80) based on a blended DCF/PE methodology.
What else did the broker have to say about the stock?
Macquarie notes that at AMP's 1H FY25 results "management indicated that the below system mortgage book growth reflected a disciplined approach to the volume/margin trade-off".
Thus, we continue to monitor GLAA balances as a key indicator in the margin vs volume discussion….AMP Bank represented ~27% of group underlying NPAT in 1H25.
The broker also commented that AMP's Gross Loan and Acceptance (GLAA) balance for September has increased 2.3% since December last year. This is consistent with company expectations of a "slower than market" FY25.
It also added that for the second half of FY25, it expects GLAA growth versus the prior period to be 1.5% higher. The market expects a 1.9% increase from the previous period.
"Although APRA's statistics do not match AMP's disclosures exactly in dollar terms, they have been reliable for growth rates," Macquarie said in its note.
Macquarie also said that its investment thesis is at short-term risk of volatility in AMP's assets under management in its Platforms and Superannuation and Investments businesses, and changes in mortgage competition.
