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

A broker thinks AMP shares are going to start rising…

| More on:
holding up phone in front of stock market

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is it possible 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 the business will be valued in 12 months from now. So, while the AMP share price could reach that target by Christmas, the broker is only estimating where AMP will be a year from now.

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

It's Citi that thinks 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 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 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 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 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, AMP shares are currently valued at under 11x FY21's estimated earnings.

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

The broker also thinks 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 the AMP share price is 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.

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.

More on Broker Notes

Suncorp share price Businessman cheering and smiling on smartphone
Broker Notes

5 ASX 200 shares for smart investors to buy in July

Brokers think these shares could be in the buy zone ahead of the new month.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names the best ASX 200 shares to buy in FY26

The broker has good things to say about these shares.

Read more »

Man on his laptop standing next to data centres.
Broker Notes

Macquarie tips 54% upside for NextDC shares

NextDC shares certainly have momentum.

Read more »

Two lab workers fist pump each other.
Broker Notes

What's JP Morgan's price target on CSL shares?

Are CSL shares undervalued or will they continue to underperform?

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Broker Notes

Macquarie tips 33% return for this ASX 200 stock

The broker thinks this blue chip could be cheap at current levels.

Read more »

A woman in her late 30s holds her hands out either side with the palms up as if indicating she doesn't know the answer to a question. She has a quizzical look on her face.
Broker Notes

The A2 Milk share price: Buy, hold, sell?

Let's see what Bell Potter is saying about this popular stock.

Read more »

A smiling woman holds a Facebook like sign above her head.
Broker Notes

Morgans names 2 top ASX shares to buy now

What is the broker recommending to clients this week?

Read more »

It's raining cash for this man, as he throws money into the air with a big smile on his face.
Broker Notes

2 of the best ASX 200 shares that money can buy

Let's see why Bell Potter thinks these are among the best shares to buy now.

Read more »