Have shares in AMP found the bottom?

AMP $1.87

A bad result for the group yesterday, but something the market expected. Wealth Management outflows have crippled earnings which sank to a loss of $2.5b. on an underlying basis, earnings fell around 30% to $464m for the full year. There was $6.3b of outflows in the year, although around a third came from pension payments.

For the year ahead, AMP were looking for earnings to stabilize with the market priced around the same level. AMP Capital and the banking arm look reasonable, but the wealth management guys are replacing high margin with low margin with plenty of remediation costs along the way.

A number of brokers upgraded this price targets on the back of the result. Bell Potter was the most notable, switching from their long term sell call straight to a buy, raising the price target over 70% to $2.25. It’s a big call, but not all too far fetched. The analyst still has concerns around wealth margins as well as outflows but see the sale of the Life business and NZ Wealth as positives while the bank and capital arms continue to perform well.

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