July 27 (Reuters) - Several analysts on Monday boosted their earnings outlook and share-price target for T. Rowe Price Group Inc (TROW.O) to reflect the higher-than-expected quarterly profit the company posted.
“In recent months, T. Rowe’s fund performance has staged a significant turnaround which, coupled with better than expected cost controls, should support better earnings growth than the peer group,” FBR Capital Markets analysts said.
FBR analysts raised their rating on the stock to “market perform” from “underperform,” and price target to $42 from $33. During the second quarter, the Baltimore-based company, one of the 10 largest publicly traded U.S. fund managers, took in $3.5 billion of new money, including $4.1 billion that investors added to its mutual funds.
According to an analyst at Barclays, T. Rowe continues to attract steady inflows, which come in at a faster pace when compared to the industry, owing to its focus on the retirement market.
The company’s target-date-retirement funds, which make up roughly 10 percent of the company’s assets, pulled in $1.8 billion during the second quarter.
Going forward, the company is well positioned to achieve positive operating leverage as it targets $17 million in annualized net savings from its workforce reduction in the first half of 2009, Barclays’ Roger Freeman added.
Analysts at FBR, Barclays, Jefferies & Co, Keefe Bruyette and Woods, and Citigroup expect T. Rowe to post 2009 earnings of $1.43 a share to $1.53. They previously expected the company to earn between $1.29 a share and $1.40.
The combination of T. Rowe’s above average equity base and recent cost cutting efforts have enhanced its earnings’ outlook, Jefferies analysts said.
Shares of the company rose about 1 percent to $45.75 in Monday morning trading on Nasdaq. The table below lists the price target changes on the stock: BROKERAGES PRICE TARGET RATING
New Old Barclays $47 $44 Equal-weight Citigroup $52 $48 Buy FBR $42 $33 Market perform Jefferies $44 $36 Hold KBW $46 $43 Market Perform (Reporting by Tenzin Pema in Bangalore; Editing by Maju Samuel)