We are upgrading our recommendation on
T. Rowe Price Group
) to Outperform from Neutral based on the company's debt-free
position and steady profit trend. The company's fourth-quarter 2011
earnings outshined the Zacks Consensus Estimate. Moreover, earnings
also compared favorably with the prior-year quarter.
Higher-than-expected top-line growth and increased assets under
management (AUM) assisted the improved performance. Furthermore,
relative mutual fund performance was also positive. Higher
operating expenses were on the downside.
The company has the potential to take advantage of the economic
recovery and benefit from the growth opportunities in the domestic
and global AUM. Our six-month target price of $70.00 equates to
about 20.8x our earnings estimate for 2012. Combined with the $1.36
per share annual dividend, this price target implies an expected
return of 13.9% over that period.
T ROWE PRICE (
): Free Stock Analysis Report
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