It hasn’t been a good year for AMP shares…
The post The AMP (ASX:AMP) share price is down 27% in 2021 appeared first on The Motley Fool Australia. –
The AMP Ltd (ASX: AMP) share price has been a very poor performer so far in 2021.
Since the start of the year, the financial services company’s shares are down 27%.
This means the AMP share price has now lost 78% of its value over the last five years.
Why is the AMP share price under pressure?
There have been a number of catalysts for the weakness in the AMP share price in 2021.
One of those was the company’s poor performance in FY 2020. For the 12 months ended 31 December, AMP reported a 32.8% decline in underlying profit to $295 million. This was driven by earnings declines across all four of its business units.
In addition to this, AMP Australia’s wealth management business reported an 8% reduction in assets under management following outflows of $8.3 billion. It then revealed further net cash outflows of $1.5 billion during the first quarter of FY 2021.
Also weighing on the AMP share price was an update in April that revealed that talks with Ares Management in respect to a takeover of the AMP Capital private markets business ended without a deal.
Is this a buying opportunity?
Since then, the company has announced a new CEO and plans to pursue a demerger of AMP Capital’s private markets investment management business.
However, despite how promising these developments are, brokers remain largely lukewarm on the prospects of the AMP share price. Citi, for example, has a neutral rating and $1.25 price target on its shares.
It commented: “Given the failed negotiations with Ares, AMP’s plan to demerge its AMP Capital Private Markets business is probably the only realistic option left. Although it could be a potential route to value realisation, we worry how much of the business will be left by the time the demerger is scheduled to take place in 1H22, with rivals such as Dexus trying to pick off funds in the interim.”
“We also note key deal makers are leaving and the business will need a new CEO [now appointed]. There are also question marks over scale and distribution capabilities. We reverse the Ares transaction in our forecasts, leading to an EPS uplift but lower valuation,” Citi concluded.
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.
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*Returns as of May 24th 2021
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Motley Fool contributor James Mickleboro 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.