when will AMP HIT $3.00, page-3

'End of the tunnel'
Mr Sotiriou, a longstanding critic of AMP's vertically integrated model, was not concerned about the potential for conflicts of interest in the new vision and recommended clients buy AMP stock for the first time since August 2016."We believe we can see through to the other end of the tunnel for AMP for the first time in many years and reverse our longstanding Sell rating," he wrote in a client note."This is not done lightly, nor is it done in isolation of the issues the company is still facing, as there are many. Instead, we believe AMP has put enough of the issues on the table."Bell Potter upgraded its underlying earnings per share estimates for AMP for 2021 and 2022 by 8.7 per cent and 14.7 per cent respectively, although it expects net losses for at least the next three years.

COMMENTARY AMP's 2019 profit was -18% below consensus and down -32% on the previous year. Pressures in wealth management overshadowed an otherwise strong performance from AMP Capital and a reasonable outcome in banking, the broker notes.Guidance is for a further -20% drop in 2020 wealth management earnings, but the broker sees guidance risk to the downside. The broker needs to see more progress on a turnaround before becoming more positive. Hold retained, target falls to $1.86 from $$1.89

COMMENTARY Macquarie was disappointed with FY20 guidance, which included -20% lower earnings for Australian wealth management.Management has committed to reviewing capital management options following the sale of the life business.Until this is finalised Macquarie continues to believe the investment case is challenging.Coverage is transferred to another analyst and the broker retains a Neutral rating and $1.75 target.

COMMENTARY Citi analysts have been of the view that, at best, AMP is looking forward to a long road to recovery, and that view hasn't changed. Hence why the rating remains Sell/High Risk. Estimates have been lowered post the release of FY19 financials.Management's guidance for a flat underlying profit this year translates to -5% fall, explain the analysts. A few factors are helping management, the analysts point out, including more of the profit will be coming from investment earnings booked at above market returns.Citi suspects while prospects are improving for the bank and AMP Capital, earnings for AMP Wealth Management may not bottom until FY21. Significant revenue margin squeeze is expected in the medium term. Target price unchanged at $1.70.

COMMENTARY The second half outcome fell well short of UBS estimates. This largely related to AMP life which will be divested in the current half.Nevertheless, with the stock now trading at an FY21 estimated PE of 14x, and with improving growth thereafter, UBS upgrades to Neutral from Sell. Target is steady at $1.80.

COMMENTARY 2019 results were in line with expectations. Guidance for 2020 underlying profit, adjusted for the life sale, is forecast to be roughly flat at $440m.Australian wealth management operating earnings are likely to be down around -20% but offset by growth in other divisions.Credit Suisse observes a large amount of execution risk in the transformation strategy but the current share price implies minimal chance of partial success. Outperform rating and $2 target maintained.

COMMENTARY Underlying net profit in 2019 missed Morgan Stanley's estimates by -25%. While the life sale is on track to be completed by June 30, the broker suspects the downgrade to the 2020 outlook will weigh on the stock.Wealth revenue margin guidance of 70 basis points implies a -$65m earnings drag. Morgan Stanley suspects earnings are closer to stabilising in 2020, but risks remain.Rating is Equal-weight and target is $1.70. Industry view is In-Line.

COMMENTARY 2019 results were weaker than Ord Minnett expected although guidance for 2020 was largely in line.The broker notes the significant changes to the operating model and strategy, amid indications it would likely be 2021 before there is certainty that recent difficulties are behind the company.Ord Minnett maintains a Hold rating and $1.95 target.This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Morningstar equity analyst Chanaka Gunasekera says AMP's three businesses – Australian Wealth Management, AMP Capital and AMP Bank - performed as expected, and maintains his $1.95 per share fair value. Featuring was the steep fall in earnings from the struggling Wealth business and continued strong performance from AMP Capital.
The disappointment was the further capital losses in AMP Life: "The life businesses, which is in the process of being sold to Resolution Life, were hit by additional 'capitalised and experience' losses of $176 million in the second half of the year," he says.