ERDESK: T.Rowe Price 1Q10 Earnings Release Friday, April 23rd
We expect TROW to report 1Q10 EPS of $0.60, +5% above consensus estimates of $0.57.
· We expect AUM at the end of March to reach $423 bn (+8% Q/Q; +57% Y/Y), with strong inflows into the company’s bond mutual funds. We are tracking flows and returns on 110 TROW funds representing 98% of mutual fund assets. Other portfolios (40% of assets) mimic the returns of equity funds.
· Total net revenues should reach $571.9 mn (+5% Q/Q; +49% Y/Y), with investment advisory fees reaching $484.9 mn (+5% Q/Q), with stock advisory fees up +4% Q/Q ($266.2), bond +6.5% ($66.7 mn) and other portfolios +6.1% ($152 mn)
· Non operating investment income should reach $11 mn (+9% Q/Q), stemming from investments in sponsored mutual funds (seed money mainly) and other investments
· TROW launched last January the Global Infrastructure Fund which invests in listed stocks of global infrastructure related companies. The fund is managed by Susanta Mazumdar out of the Singapore office and had $19.7 mn in AUM at the end of March (up from $6 mn at the end of January).
· The company also completed the acquisition of a 26% stake in India’s UTI Asset Management for $142.4 mn last January 20th. UTI is the fourth largest manager in India and had $17.8 bn in AUM at the end of 2009. TROW is also said to be in the final stages of talks to acquire a minority stake in CAM, China’s largest asset manager (with $40 bn in AUM and a 10% market share). The company is also fueling its international expansion by partnering with investment consultant Marbo in Taiwan to target retail clients.
· T. Rowe increased its quarterly dividend to $0.27 per share, up 8% Q/Q from $0.25
· TROW is trading at 18.9x consensus 2011 earnings
Provided By: Equity Research Desk, www.erdesk.com