AllianceBernstein jumps after analyst upgrade
NEW YORK (AP) — AllianceBernstein's stock jumped Thursday, after an analyst at Credit Suisse stamped his approval on the investment firm.
THE SPARK: Credit Suisse's stock analyst changed the rating on AllianceBernstein Holding LP to "Outperform" from "Neutral" and raised the target price by $1.50 to $16.
Analyst Craig Siegenthaler argued that investors are likely to put more money into AllianceBernstein's funds over the coming months. For asset managers like AllianceBernstein, more money under management translates into more revenue.
THE ANALYSIS: In a research note, the Credit Suisse analyst praised the investment firm for improving the performance of its funds and expanding the range of its investment vehicles. He pointed to a shift in focus to popular bond funds, instead of weaker performing stock-picking funds. As a result, he expects the total flow of money into AllianceBernstein's funds will turn positive in the final quarter of the year. Earnings should get a boost.
THE BIG PICTURE: Americans have favored bond funds over U.S. stock funds since the financial crisis in 2008. The Investment Company Institute said Wednesday that U.S. mutual fund investors put $7.6 billion into bond funds in the week ending Aug. 15. They pulled $2.7 billion from U.S. stock funds, the fourth straight week of withdrawals.
Siegenthaler estimates that AllianceBernstein will post earnings of 26 cents per share in the third quarter, a penny above the average analyst estimate, according to FactSet. His estimate rises to 30 cents per share in the fourth quarter, 3 cents above the current consensus.
SHARE ACTION: The New York-based firm's stock was up nearly 4 percent to $13.27 in midday trading Thursday. It has traded as low as $11.44 and as high as $17.28 over the past year.