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UBS and Sterne Agee Raise Target Prices on T. Rowe Price (TROW) (Update)

Update (9:35 a.m.): Updated with Wednesday market open information.

NEW YORK (TheStreet) -- UBS raised its EPS estimates on T. Rowe Price  (TROW) through 2015 and also raised its target price to $93. The firm cited higher AUM baseline and moderately low advertising expense as the reasons for the move and set a "buy" rating.

Sterne Agee also raised its target price to $94 as institutional outflows at T. Rowe Price have slowed. The firm set a "neutral" rating.

The stock was moving down 1.5% to $79.49 shortly after the market opened on Wednesday.

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Separately, TheStreet Ratings team rates PRICE (T. ROWE) GROUP as a "buy" with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PRICE (T. ROWE) GROUP (TROW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, growth in earnings per share and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Capital Markets industry and the overall market, PRICE (T. ROWE) GROUP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for PRICE (T. ROWE) GROUP is rather high; currently it is at 50.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 30.56% significantly outperformed against the industry average.
  • PRICE (T. ROWE) GROUP has improved earnings per share by 6.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PRICE (T. ROWE) GROUP increased its bottom line by earning $3.36 versus $2.92 in the prior year. This year, the market expects an improvement in earnings ($3.86 versus $3.36).
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: TROW Ratings Report

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