Insights

Can the AMP (ASX:AMP) share price hit $1.25 by Christmas?

A broker thinks that AMP shares are going to start rising.
The post Can the AMP (ASX:AMP) share price hit $1.25 by Christmas? appeared first on The Motley Fool Australia. –

May it be possible that the AMP Limited (ASX: AMP) share price can rise more than 10% and reach $1.25 by Christmas?

It may be useful to know that a price target is where the broker estimates that the business will be valued in 12 months from now. So, whilst the AMP share price could reach that target by Christmas, the broker is only estimating where AMP will be in a year from now.

Which broker thinks the AMP share price will reach $1.25?

It’s Citi that thinks that AMP shares can rise by 10%.

However, the broker doesn’t rate the financial business as a buy, just rating it as a hold.

Citi believes that AMP can go through a large transformation and become more profitable as the business changes.

What is the financial company doing?

A couple of months ago it reported its FY21 half-year result.

It said that there was an improved performance, with a recovery in economic and market conditions, as well as the ongoing transformation strategy, resulting in a 57% increase in underlying earnings.

Half-year underlying net profit increased from $115 million to $181 million. This reflected higher investment income, a “strong” cost performance and increased earnings in AMP Bank, which benefited from the release of credit loss provisions.

In terms of restructuring the business, it said that it has made a “significant” step forward in the reshaping of the implementation of a new service model for aligned advice and conclusion of the ‘buyer of last resort’ arrangements from the end of 2021.

AMP also said that demerger plans are on track. The sale of the Global Equities and Fixed Income (GEFI) business has been agreed and the Multi Asset Group transfer is underway. The internal operational separation is targeted by the end of FY21, with the demerger to complete in the first half of FY22.

The valuation on the AMP share price

According to Citi, currently the AMP shares are valued at under 11x FY21’s estimated earnings.

It’s then expecting profit to increase in FY22. So, that puts the AMP shares at under 10x FY23’s estimated earnings.

The broker also thinks that AMP could pay a dividend in FY22 of $0.05 per share. That would translate to a forward dividend yield of 4.5%.

However, there are also some brokers that don’t believe AMP shares are going to move much over the next year. UBS is one of those brokers, with a price target of $1.14. That’s almost the same price that it’s at right now. UBS notes the ongoing outflows that AMP is experiencing.

UBS doesn’t think these problems are going to be resolved in the rest of the 2021 financial year, though it’s monitoring what could happen with/after the demerger.

The post Can the AMP (ASX:AMP) share price hit $1.25 by Christmas? appeared first on The Motley Fool Australia.

Should you invest $1,000 in AMP right now?

Before you consider AMP, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and AMP wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Here’s what happened to the AMP (ASX:AMP) share price in the FY21 third quarter

AMP (ASX:AMP) share price lifts amid new board appointments

Why this top broker sees 16% upside for the AMP (ASX:AMP) share price

How has the AMP (ASX:AMP) share price beaten the market over the past week?

Why did the AMP (ASX:AMP) share price have such a terrible September?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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