RBC Capital Markets LLC analyst Kenneth Lee upgraded Ameriprise Financial Inc., while downgrading Invesco Ltd. and Owl Rock Capital Corp.
Lee believes that Ameriprise's core asset and wealth management business will continue to deliver strong performance. Efforts to expand the company's client base and ramp up the bank business could drive additional growth in the asset and wealth management business and diversify revenue streams, the analyst wrote. He also expects robust return of capital in terms of share buybacks and dividends given the company's excess capital of more than $2.3 billion.
The analyst upgraded Ameriprise to "outperform" from "sector perform" and raised the price target to $190 from $149. His adjusted EPS estimates are $16.16 for 2019 and $17.95 for 2020.
On Invesco, Lee said there is more uncertainty on net flows versus peers in 2020. However, Lee said RBC continues to favor the asset manager's depth of capabilities and well-diversified asset mix. He also noted the company's acquisition efforts in line with the changing industry landscape, setting it up well for organic growth in the long term.
Lee downgraded Invesco to "sector perform" from "outperform" and reduced the price target to $19 from $22. His adjusted EPS estimates are $2.57 for 2019 and $2.64 for 2020.
The downgrade on Owl Rock is based solely on valuation, Lee wrote, with its price to net asset value ratio relatively full at about 1.2x. The analyst views Owl Rock as one of the few business development companies with scale advantages, including access to meaningful deal flow. The company is also expected to have a dividend yield of 9.5% in 2019 and 10.2% in 2020.
The analyst downgraded Owl Rock to "sector perform" from "outperform" with the price target unchanged at $17. His core EPS estimates are $1.55 for 2019 and $1.60 for 2020.