Noting the attractive price of its stock and the likelihood that it will have strong inflows in the first quarter, analysts at Wachovia and UBS have upgraded their outlook on T. Rowe Price, MarketWatch reports.
The analysts said they expect inflows to be even stronger than usual due to the effects of the Pension Reform Bill and a healthy stock market. Wachovia, in fact, expects inflows to double and changed its outlook from market perform to outperform.
Wachovia analyst Douglas Sipkin said he analyzed sales data from the Investment Company Institute and found that flows in the first quarter account of an average of 47% of annual flows to stock mutual funds.
Sipkin also said that T. Rowe’s stock trades “marginally below the group compared to a five-year average premium of 10%” by the best-performing asset managers. Thus, in the first quarter of the year, he expects T. Rowe’s stock to rise to a premium of between 7% and 10%.
For his part, Michael Carrier of UBS said, “T. Rowe remains one of the premier firms in the asset management industry, with a culture second to none. Given the recent pullback in the shares despite solid underlying fundamentals, we view the risk/reward as attractive."