雅虎香港財經 Invesco's (IVZ) Strategic Moves & AUM Aid, Muted Revenues Ail
Invesco Ltd. IVZ remains well-positioned for growth on the back of diversified offerings, efforts to enhance operating efficiency and strong assets under management (AUM). However, a high intangible assets composition on the balance sheet and subdued net revenues are major headwinds.
IVZ has been executing initiatives to enhance operating efficiency. The company surpassed its goal for net cost synergies from the OppenheimerFunds acquisition and achieved $200 million in annualized net savings prior to the planned schedule. While adjusted operating expenses experienced a 2.2% rise in 2023, they increased just 1% in the first quarter of 2024. The company aims to generate $60 million in annual net savings this year (higher than the $50 million mentioned earlier) as part of the organizational changes. We estimate total adjusted expenses to dip marginally in the second quarter and 1.1% in the third quarter of 2024.
Invesco’s AUM balance has been consistently improving. The metric witnessed a compound annual growth rate (CAGR) of 12.3% over the last five years ended 2023. The OppenheimerFunds acquisition in 2019 led to a significant rise in the company’s AUM, turning it into one of the leading global asset managers. The uptrend persisted in the first quarter of 2024. Invesco has been capitalizing on the rising demand for passive offerings, which constituted 40.1% of total AUM as of Mar 31, 2024. Our estimates suggest passive AUM to witness a 2.6% CAGR by 2026.
Further, Invesco holds a strong footprint in Europe, Canada, and the Asia-Pacific, besides the United States. As of Mar 31, 2024, roughly 28% of the total AUM was from clients residing outside the United States. The acquisitions of Intelliflo, a leading UK-based advisor-focused digital solutions firm, and Europe-based Source, a leading independent specialist provider of ETFs, helped the company in enhancing global market share and footprint. These strategic pursuits, alongside broadly diversified offerings, are likely to support the company in generating further momentum from business in such regions.
Nonetheless, Invesco’s subdued top-line expansion is a major concern. Though total operating revenues witnessed a rise in the first quarter of 2024, the metric has been experiencing a downtrend since the second half of 2020. Despite having a robust institutional pipeline, diversified product offerings, alternative investment strategies and strong retail channels, revenues are likely to remain subdued in the near term due to a challenging operating backdrop. We project total operating revenues to witness only 1% growth in the second quarter of 2024.
Additionally, high levels of intangible assets present in the IVZ’s balance sheet are another challenge, given that goodwill and intangible assets are subject to an annual impairment test. As of Mar 31, 2024, goodwill and intangible assets amounted to $14.5 billion (51.5% of total assets). Several factors may trigger the initiation of impairment of the book value of such assets, due to which their values will be written down. This is expected to negatively impact the company’s financials. In 2023, amortization and impairment of intangible assets-related charges hampered the company’s profitability, resulting in a net loss.
Invesco currently carries a Zacks Rank #3 (Hold). Over the past six months, shares of the company have risen 1.9%, underperforming the industry’s growth of 16.8%.
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