AMP Ltd (ASX: AMP) shares are in in the green at the time of writing.
Back in February, the share price crashed 26% after the financial services company posted a disappointing FY25 financial result.
This marked the company's largest one-day fall since the wealth manager since 2003, when its value tanked 36%.
At the time, AMP reported a 20.8% lift in underlying NPAT, a 9% increase in total assets under management (AUM), and a 11.3% decline in statutory NPAT over the year. The result was far below market expectations across the board and investors were disgruntled.
Ongoing geopolitical tensions and concerns about Australia's inflation data rate also weighed heavily on financial shares like AMP.
Thankfully, AMP's first-quarter update was a little more positive. The company reported a 45% growth in Platforms net cashflows and improved Superannuation & Investments (S&I) net cash outflows in April.
There have been plenty of headwinds facing the company this year, but I still think AMP shares are a no-brainer buy.
Here are three reasons why.
Image source: Getty Images
1. Excellent growth potential ahead
While AMP's FY25 results disappointed investors, fact is, it still demonstrates that the company's earnings are growing across its wealth platforms, superannuation business and also improved cash flow.
The first-quarter update in April confirmed that strong business growth is underway and revealed a significant momentum across several of its key divisions.
AMP is focused on improving its operational leverage in its platforms, and looking at new capital relief strategies to help enhance returns.
AMP is also planning to build on its position in China and leverage retirement expertise in New Zealand in response to ongoing sector tailwinds.
The good news is that AMP is still viewed as a potential turnaround story.
Many think that if management successfully executes its strategy, improves profitability, and restores market confidence, the share price could benefit from both earnings growth and a higher valuation multiple.
2. Management is confident
At the same time as announcing its first-quarter results, AMP announced a $150 million share buyback. This is positive for investors because it reduces the number of shares on issue and can increase earnings per share over time. It also flags management confidence in the business.
3. Brokers are bullish
According to Market Index data, the majority of brokers have a strong buy rating on AMP shares, and expect a 6% upside (at the time of writing) over the next 12 months to an average price target of $1.70 a piece.
TradingView data shows some are even more bullish. Out of 10 analysts, eight have a buy or strong buy rating on AMP shares and another two rate the financial stock as a hold. The average 1.715 target price implies a 7% upside ahead and the maximum $1.94 target price implies the shares have the potential to climb another 22% from here, at the time of writing.
Citi is one of the more positive brokers. It renewed its buy call on AMP shares with a $1.80 target earlier this month.
