Invesco’s Revenue Challenges and Declining Net Revenue Yield Prompt Sell Rating

Analyst Michael Brown of Wells Fargo maintained a Sell rating on Invesco (IVZ – Research Report), retaining the price target of $19.50.

Michael Brown has given his Sell rating due to a combination of factors impacting Invesco’s financial performance. The company’s long-term organic growth was modest and primarily driven by ETF net inflows, which are predominantly low-fee or no-fee products. This trend indicates a shift towards investment options that don’t significantly contribute to revenue growth, posing a challenge for the company’s profitability.
Furthermore, there is an ongoing decline in the net revenue yield, which reflects a decrease in fee income from the company’s asset management services. Although there is some growth in APAC and Private Markets, these areas haven’t significantly offset the broader trend of fee compression. The limited growth in high-fee segments like Fundamental Equity further exacerbates the revenue challenges, leading Michael Brown to recommend a Sell rating for Invesco’s stock.