Why this top broker says the AMP share price is 27% over-valued

ASX expensive defensive shares man carrying large dollar sign on his back representing high P/E ratio or dividend

ASX expensive defensive shares man carrying large dollar sign on his back representing high P/E ratio or dividendThe AMP Ltd (ASX: AMP) share price is down 0.7% in afternoon trading.

AMP shares closed yesterday at $1.16 and are currently trading for $1.15.

But even with that dip, analysts at UBS believe the S&P/ASX 200 Index (ASX: XJO) listed wealth management company is 27% overvalued.

What is the UBS price target?

Analysts at the leading broker have retained their sell rating on AMP shares.

They reported that AMP’s funds under management update, released last Thursday, was in line with their expectations. However, AMP’s assets under management were below expectations.

The company’s Australian Wealth Management segment’s assets under management declined to $136.5 million in Q1 2021, down from $142.3 million in Q1 2021. The fall was due to a combination of outflows and investment losses.

Citing concerns over a structural deterioration in the AMP’s core wealth business, UBS analysts believe the AMP share price is lofty. UBS has a 90 cent price target on the company’s shares.

That’s just over 27% below the current price of $1.15.

AMP share price snapshot

Whether AMP shares will retrace 27% in line with the expectations of UBS analysts remains to be seen.

We do know that, so far in 2022, the ASX wealth manager has been handily outperforming.

Year-to-date the AMP share price has gained 15.2%. That compares to a loss of 7.2% posted by the S&P/ASX 200 Index (ASX: XJO).

AMP also pays a 3.1% trailing dividend yield, 90% franked.

The post Why this top broker says the AMP share price is 27% over-valued appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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