On Apr 2, 2013, we reiterated our long-term recommendation on
Franklin Resources Inc.
) at Neutral. The affirmation is based on Franklin's long- term
growth prospects as well as better-than-expected fiscal first
quarter results. Yet, increased regulatory restrictions and
sluggish economic recovery could dent assets under management
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Why the Neutral Stance?
Franklin has been growing strategically and expanding its
foothold though acquisitions. Over the last few quarters, the
company has completed a few acquisitions and stake buys, thus
diversifying product offerings in key markets and providing the
finest investment options to satisfy growing investors' need.
Moreover, the company's portfolio of diverse and innovative
investment products provides it with an edge over its
Additionally, Franklin's fiscal first quarter (ended Dec 31)
outpaced the Zacks Consensus Estimate by 1.7%.
Better-than-expected results were primarily driven by its top
line growth, partly offset by an increase in operating costs.
Moreover, increased level of AUM was a tailwind for the quarter.
Following the fiscal first-quarter results, the Zacks Consensus
Estimate for fiscal 2013 inched up about 1% to $9.97 per share
over the last 60 days. Likewise, the Zacks Consensus Estimate for
fiscal 2014 advanced 1.4% to $11.23 per share in the same time
frame. Hence, Franklin now has a Zacks Rank #2 (Buy).
Other Stock Worth Considering
Although we prefer Franklin, there are other investment
management stocks worth a look. These include
Ameriprise Financial Inc.
). While the first stock carries a Zacks Rank #1 (Strong Buy),
the other two retain a Zacks Rank #2 (Buy).