We issued an updated research report on Invesco Ltd. (IVZ) on Jun 12, 2014. The company’s better-than-expected first-quarter results released on May 1 and consistent improvement in top line seem impressive. However, we remain skeptical about the company’s high debt levels and rising expenses.
Invesco’s first-quarter adjusted earnings per share not only surpassed the Zacks Consensus Estimate but also increased 20.0% year over year. Results benefited from revenue growth partially offset by higher expenses.
Additionally, Invesco’s steady top-line growth driven by improvement in assets under management remains its major strength. We believe that the company’s diverse product portfolio and alternative investment strategies will continue to support top-line growth in the quarters to follow.
However, rising operating expenses remains a major concern for Invesco. In spite of cost-cutting measures being initiated, the impact is not expected to be felt any time soon as the company continues to invest in franchise.
Over the last 60 days, the Zacks Consensus Estimate for 2014 increased 1.0% to $2.44 per share. However, for 2015, the Zacks Consensus Estimate remained unchanged at $2.77 per share over the same time period.
Hence, currently Invesco carries a Zacks Rank #3 (Hold).
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