DES MOINES, Iowa (AP) ¿ Shares of asset managers rose Thursday, led by T. Rowe Price Group Inc., as analysts predicted that investors will dive further into stocks, pushing fee income higher and improving profitability for companies in the industry. Goldman Sachs analyst Marc Irizarry raised his rating on the sector to "Attractive" from "Neutral." On average, he expects shares of companies of asset managers that carry Goldman's "Buy" investment rating will rise 30 percent. The firm has "Buy" ratings on KKR Financial Holdings, Artio Global Investors Inc., The Blackstone Group, Franklin Resources, Och-Ziff Capital Management Group and BlackRock Inc. Earnings estimates are likely to rise as the environment for the asset managers improves in 2010, Irizarry said. As investors return to equities and other riskier investments, asset managers will see fee income rise, which will improve operating margins, Irizarry wrote in a note to investors. He expects the group's average assets under management are expected to grow 13 percent next year. Equity flows in 2010 are likely to favor international funds, passive strategies and managers with stronger performance track records, Irizarry said. Och-Ziff Capital shares climbed 24 cents, or 2 percent, to $12.50; KKR shares rose 1 cent to $5.41; Artio Global shares rose 35 cents to $23.88; and Blackrock Inc. gained $1 to $228. Positive comments on the sector also came Thursday from Jefferies & Co. analyst Daniel T. Fannon who upgraded T. Rowe Price to "Buy" from "Hold" and increased his price target on the shares to $60 from $54.
He said the company's investment performance continues to be strong, building on a good track record of the last two years. T. Rowe Price is well positioned to take advantage of normal investment trends as more investors turn back to stocks. T. Rowe Price shares climbed $1.41, or 3 percent, to $49.88 in midday trading. Fannon also initiated coverage of Franklin Resources Inc. with a "Hold" rating and a $115 price target, noting that the shares are up nearly 70 percent in 2009, compared with a more than 21 percent rise in the Standard & Poor's 500 index. The company has a diverse base of assets under management spread across equities, hybrids, and fixed income products in U.S. and international markets. Compared to its peers, the company has among the highest percentage of assets outside of the U.S., an advantage as investor demand for greater international stock exposure grows, he said. Franklin Resources Inc. shares rose $1.82, or 1.7 percent, to $109.94.