AMP Ltd (ASX: AMP) shares had a difficult time in November.
During the month, the financial services company's shares dropped almost 11% despite a strong rebound late in the month.
This compares unfavourably to a 4.5% gain by the ASX 200 index over the period.
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Why did AMP shares tumble?
Investors were hitting the sell button in a panic in the middle of the month after the company released an investor update.
While the company announced plans to launch a digital bank that serves small businesses, this was overshadowed by commentary on its margins.
Management advised that net interest margin (NIM) pressure is expected to continue into FY 2024 based on current market conditions.
This didn't go down well with analysts at UBS. In response to the update, the broker reiterated its sell rating and cut its price target by 18% to 82 cents.
The broker believes that AMP's bank volumes and margins are likely to continue softening before potentially improving from FY 2026 onwards.
Is this a buying opportunity?
While UBS certainly isn't going to be putting AMP shares on its Christmas list this year, will anyone else?
Well, one broker that sees plenty of upside for investors over the next 12 months is Ord Minnett.
The broker responded to the update by retaining its accumulate rating with a trimmed price target of $1.30. This implies a potential upside of approximately 38% for investors from current levels.
Elsewhere, late in the month, Citi retained its neutral rating and 90 cents price target.
Its analysts may only be neutral but they are expecting another capital return very soon. Citi said:
News that the Buyer of Last Resort ("BoLR") class action has now been settled, in our view, presents a positive step forward in not only resolving its most significant legacy matter but also now potentially allowing AMP to progress with its third tranche of capital return. Settlement is for a total of A$100m, which is lower than our prior back of the envelope estimates. With finalisation and execution of a deed of settlement remaining and Federal Court approval, actual settlement is likely to happen in 1H24. We retain our Neutral rating and A$0.90 target price, but now expect AMP to announce its third tranche capital return by the end of the year.
