June 3 (Reuters) - Citigroup upgraded four U.S. asset managers, including Franklin Resources Inc (BEN.N) and Legg Mason Inc (LM.N), saying the group was well-positioned to benefit from several positive developments such as a rise in equity and fixed-income flows.
Citi said with many stocks still hovering around late 2008 levels, it saw asset flow trends that could drive assets under management (AUM) and earnings power for several names.
“The asset manager group has jumped from early March lows - with limited help from equity and fixed income inflows,” the brokerage said in a note to clients.
Citi said Franklin Resources Inc (BEN.N) had about $10 per share of cash on hand which could be redeployed towards an acquisition.
The brokerage reiterated its “buy” rating on BlackRock Inc (BLK.N) and raised its price target to $190 from $165 on the stock.
Invesco and Legg Mason Inc (LM.N) should capture improving global flows with a significant portion of their AUM outside the United States, Citi said, adding that a weakening U.S. dollar should add earnings momentum on both stocks.
“As the markets stabilize, the operating leverage driven by headcount reductions and other expense reductions across the group should be a catalyst for margin expansion,” the brokerage said. (Reporting by Santosh Nadgir in Bangalore; Editing by Anil D‘Silva)