1、DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be awar
2、e that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.14 January 2019Americas/United StatesEquity ResearchAsset Managers US Asset Managers&Brokers EARNINGSRese
3、arch AnalystsCraig Siegenthaler,CFA212 325 3104craig.siegenthalercredit-Ari Ghosh212 325 7113ari.ghoshcredit-Steven Castano212 325 2653steven.castanocredit-Gautam Sawant,CFA212 325 3422gautam.sawantcredit-Positive on Brokers/Cautious on Traditionals Revising EPS in Front of 4Q18 ResultsPositive on t
4、he Retail Brokers:We look for strong quarters relatively from the retail brokers and believe the business models will generate solid organic growth and exhibit their defensive qualities,which we think are currently underappreciated by the markets.We believe overall organic growth will slow modestly(
5、mostly institutional)but remain robust relative to other financial services industries.Additionally,we see increasing cash sweep balances and stronger DARTs as two key defensive qualities that will benefit 4Q18 earnings.Given the tight valuation spread between the retail brokers(11x versus 9x for tr
6、aditionals and 9-10 x for fins sector),we believe the industry is undervalued relative to its future EPS growth.LPLA is our top long in 2019,and we remain positive on SCHW on a 12-mo+basis(see company-specific commentary on page 2).Cautious on Traditional Asset Managers:We forecast large net redempt
7、ions(on average),large negative marks(which spill into 2019 mgmt.fees)and negative operating leverage.Despite these NT challenges,we estimate the stocks valuations are fairly close to the financial sector and the retail brokers,which keeps us cautious on the traditionals.We estimate net flows will b
8、e significantly weaker y/y in 2019,and also see continued fee pressure and negative operating leverage.So while the valuations are cheap,and multiples may not go lower,we see the main risk to the stocks from weak earnings growth.BLK remains our top long,and will have a strong net flow quarter.We are
9、 more positive on TROW after its fund performance rebounded in 4Q18,and we see its flows returning into positive territory next quarter(also estimate strong buyback activity in 4Q18).With this note,we adjust our 4Q18 estimates and target prices across our traditional asset manager and retail broker
10、coverage.14 January 2019US Asset Managers&Brokers2Figure 1:Brokers&Asset Managers:Our Valuation Process Retail Brokers:Target PriceValuation Method#1Valuation Method#2Price to Cash EarningsEV to NOPATTickerCompany NameRatingCurrent PriceCapital AdjustmentTarget PriceNew Target PriceUpside to TP Tota
11、l Return(incl div)CY2020EarningsEarnings MultipleEV/NOPATLPLALPL Financial Holdings IncO$66$88$9138%40%$7.6012.0 x17.1xRJFRaymond James Financial IncN$77$100$9322%23%$7.7812.0 x6.8xETFCE*TRADE Financial CorpO$48$58$5822%22%$4.4813.0 x14.7xAMTDTD Ameritrade Holding CorpN$52$60$5915%17%$4.2414.0 x12.5
12、xSCHWCharles Schwab CorpO$44$50$5014%15%$3.3215.0 x9.9x22%22%13.0 x12.5xTraditional Asset Managers:Target PriceValuation Method#1Valuation Method#2Price to Cash EarningsEV to NOPATTickerCompany NameRatingCurrent PriceCapital AdjustmentTarget PriceNew Target PriceUpside to TP Total Return(incl div)CY
13、2020Cash EarningsCash Earnings MultipleEV/NOPATWETFWisdom Tree Investments IncO$7$1.0$10$942%44%$0.4220.0 x29.4xVRTSVirtus Investment Partners IncO$83$6.0$150$11337%39%$11.889.0 x9.2xBLKBlackRock IncO$400$573$52933%36%$29.4218.0 x19.9xIVZInvesco LtdN$18$27$2117%24%$2.578.0 x10.9xLMLegg Mason IncN$27
14、$5.0$35$3117%22%$3.308.0 x12.1xEVEaton Vance CorpN$37$51$4318%22%$3.6212.0 x10.9xAMGAffiliated Managers Group IncN$104$162$12318%20%$15.408.0 x13.0 xTROWT.Rowe Price Group IncO$92$10.0$115$10716%19%$6.9514.0 x15.4xBSIGBrightsphere Investment GroupO$11$16$1313%16%$1.608.0 x8.0 xCNSCohen&Steers IncN$3
15、4$3.5$37$352%14%$2.309.0 x13.8xABAllianceBernstein Holding LPN$28$1.0$31$293%13%$2.5611.0 x10.3xWDRWaddell&Reed Financial IncU$18$4.0$18$17-3%3%$1.668.0 x5.3xJHGJanus Henderson GroupU$21$22$19-11%-4%$2.398.0 x5.6xFIIFederated Investors IncN$26$23$23-11%-7%$2.559.0 x8.7xBENFranklin Resources IncU$30$
16、4.0$26$23-24%-14%$2.408.0 x5.9xMedian16%19%9.0 x10.9xSource:Credit Suisse Brokers&Asset Managers.Prices as of 1/11/2019.VRTS EV/NOPAT excludes tax shield(lower net of tax shield),We also moved our secondary JHG target price to A$26.Figure 2:Brokers&Asset Managers:Credit Suisse Estimates vs.Consensus
17、 TickerCompany Name CSStreet%UpsideCSStreet%UpsideAMGAffiliated Managers Group3.533.58-1%14.5014.570%BLKBlackRock6.276.38-2%25.3326.71-5%BENFranklin Resources0.650.67-3%2.442.62-7%IVZInvesco0.530.56-5%2.112.42-13%TROWT.Rowe Price Group1.581.70-7%6.246.73-7%Large Cap Traditional(Median)-3.0%-6.9%EVEa
18、ton Vance Corp0.740.740%3.063.13-2%FIIFederated Investors0.600.600%2.402.352%VRTSVirtus Investment Partners3.183.190%10.5811.47-8%ABAllianceBernstein0.640.65-2%2.342.46-5%JHGJanus Henderson Group0.630.64-2%2.372.62-10%CNSCohen&Steers0.590.60-2%2.182.33-6%LMLegg Mason0.680.71-4%2.883.14-8%WDRWaddell&
19、Reed Financial0.490.52-6%1.621.83-11%BSIGBrightSphere0.390.42-7%1.501.74-14%WETFWisdomTree Investments0.070.08-13%0.280.31-10%SMID Cap Traditional(Median)-1.6%-8.0%Traditional Asset Managers-1.7%-7.3%AMTDTD Ameritrade Holding1.001.000%3.873.92-1%ETFCE*TRADE Financial1.021.03-1%4.104.120%LPLALPL Fina
20、ncial Holdings1.351.36-1%6.276.162%RJFRaymond James Financial1.711.74-2%6.957.05-2%SCHWCharles Schwab0.630.64-2%2.872.812%Retail Brokers-1.0%0.0%4Q182019Source:Credit Suisse Brokers&Asset Managers,FactSet.Prices as of 1/11/1914 January 2019US Asset Managers&Brokers3Traditional Asset ManagersBLK(Outp
21、erform):We believe BLK increased its buyback activity further in 4Q18 and also started to pullback on expense growth(firm is margin aware).Additionally,BLK will produce the strongest net flow quarter in the group with$80B of flows(5%ann.OG),aided by$80B of flows from iShares and a positive money mar
22、ket fund quarter.TROW(Outperform):We dont expect TROW to significantly alter its expense outlook in 2019(5-9%y/y growth)but we forecast growth near the low end of the range(5-7%y/y).We also expect TROW to generate positive OG in 2019(after one quarter of outflows in 4Q18),and we believe TROW repurch
23、ased more than 2M shares in 4Q18 too(1%of its total shares).AMG(Neutral):We see AMG continuing its trend of producing weak 4Q flow results in 4Q18,but we also believe net outflows at its largest affiliate(AQR)and a slowing private equity fundraising cycle will be a large headwind for flows in 2019 w
24、hich could be well below current sellside estimates.While the AMG stock is cheap,we believe EPS growth will be close to 0%from 2017 to 2019 and estimate its EBITDA yield will continue to compress.IVZ(Neutral):We estimate IVZs LT net flows will decline further to-$20B from-$11B q/q.And see outflows d
25、eclining again in 2H19 due to the additional net redemptions from the Oppenheimer business(which we see closing in 3Q19).Given the significant debt balance at IVZ now(due to the Oppenheimer acquisition),we believe a discounted valuation(or capital adjustment)is warranted on a PE basis(EV to EBITDA a
26、lready accounts for this).BEN(Underperform):We estimate BENs net new flows deteriorated further to$24B(-13%ann.OG),and we believe BEN will generate the 2nd lowest OG rate in CY 2019(WDR lowest).We also estimate BEN may have fewer levers to pull to manage expenses in 2019-20,given its FY 2018 expense
27、 runrate is already 20%lower versus 2014.JHG(Underperform):We forecast JHGs 4Q18 flows to decline to-$7B vs.-$4B q/q,and see elevated outflows in 2019 driven by net redemptions across most of its asset class segments(exception is multi-asset given strong performance from balance fund).Retail Brokers
28、LPLA(Outperform):We see LPLA producing its strongest organic NNA result since at least 2015($7B-$8B),as its recruiting trends strengthen and its brokerage outflows slow.If this continues into 2019,we see LPLAs relative valuation improving versus retail broker peers.When this is combined with strong
29、EPS growth,it equates to another year of outperformance for the LPLA stock.SCHW(Outperform):SCHW is the most sensitive to improving cash balances,which started in 4Q18 and hopefully will continue for SCHW.Additionally,we believe SCHW may produce the strongest organic growth rate(NNA)in 4Q18 at 5-6%(
30、annualized),as we estimate AMTDs growth declined q/q.AMTD(Neutral):From AMTDs monthly client assets disclosures,we estimate softer NNAs in 4Q18.We believe the breakaway broker trend decelerated in 4Q,as advisors are less likely to change firms when the market backdrop deteriorates.However,AMTD may h
31、ave one of the strongest core earnings quarters given strong DARTs and increases in cash balances.RJF(Neutral):RJF has the most equity sensitivity among the retail brokers,which we think places their 4Q18 earnings most at risk.We also think their recruiting and NNA 14 January 2019US Asset Managers&B
32、rokers4trends may be a little softer given a view that the breakaway broker activity likely declined in the quarter(similar impact at AMTDs institutional channel).14 January 2019US Asset Managers&Brokers5Americas/United StatesBrokerage TD Ameritrade(AMTD)RatingNEUTRALPrice(11-Jan-19,US$)51.50Target
33、price(US$)(from 60.00)59.0052-week price range(US$)62.72-45.87Market cap(US$m)27,202Enterprise value(US$m)27,202Target price is for 12 months.Research AnalystsCraig Siegenthaler,CFA212 325 3104craig.siegenthalercredit-Steven Castano212 325 2653steven.castanocredit-Ari Ghosh212 325 7113ari.ghoshcredi
34、t-Gautam Sawant,CFA212 325 3422gautam.sawantcredit-Model MaintenanceAdjusting Estimates/TP:We increased our 2019/2020 EPS estimates to$3.87/$4.16 from$3.75/$4.13 due to higher projected cash sweep revenues&cash balances for 2019/20.Our Target Price of$59(previously$60)is based on a 14x multiple on o
35、ur calendar year 2020 EPS estimate.Risks to the stock include 1)rising deposit betas;2)lower organic growth in the higher ROCA retail channel.Share price performanceAMTD.OQS&P 500 INDEXApr-18Jul-18Oct-18Jan-194550556065On 11-Jan-2019 the S&P 500 INDEX closed at 2589.09Daily Jan11,2018-Jan11,2019,01/
36、11/18=US$53.74Quarterly EPSQ1Q2Q3Q42018A0.800.730.89 0.922019E1.000.881.00 0.982020E1.040.971.09 1.05Financial and valuation metricsYear9/18A9/19E9/20E9/21EEPS(CS adj.)(US$)3.343.874.164.50Prev.EPS(US$)-3.754.134.75P/E(x)15.413.312.411.5Relative P/E(%)79858587Revenue(US$m)5,452.05,919.86,229.76,613.
37、2 Dividend(current,US$)1.4Shares Outstanding(m)528Dividend yield(%)1.8Source:Company data,Thomson Reuters,Credit Suisse estimates14 January 2019US Asset Managers&Brokers6TD Ameritrade (AMTD)Price(11 Jan 2019):US$51.5;Rating:NEUTRAL;Target Price:(from 60.00)59.00;Analyst:Craig SiegenthalerIncome Stat
38、ement9/18A9/19E9/20E9/21ENet interest income2,8133,2293,6954,095Fee income2,6392,6912,5352,519Trading income-Total revenue5,4525,9206,2306,613Comp expense1,5551,3171,3721,440Other expense1,5751,3631,4011,485Total expenses3,5653,1463,2753,463Pre-provision profit1,8872,7742,9543,150Loan loss provision
39、s0000Other non-recurring pre-tax0000Pre-tax profit1,8872,7742,9543,150Minority interest-Net profit(reported)1,4732,0802,2162,362Net profit(adjusted)1,9002,1792,3022,449Per share9/18A9/19E9/20E9/21EShares(wtg avg,mn)570563554544EPS(CS Adj.)(US$)3.343.874.164.50Prev.EPS(US$)-3.754.134.75Dividend0.931.
40、401.681.93Dividend yield1.812.723.263.75ValuationP/E(adj.,x)15.413.312.411.5Quarterly EPSQ1Q2Q3Q42018A0.800.730.890.922019E1.000.881.000.982020E1.040.971.091.05Company BackgroundTD Ameritrade is an online broker.Blue/Grey Sky ScenarioOur Blue Sky Scenario(US$)85.00Our Blue Sky valuation of$85 is bas
41、ed on a 15.4x multiple(which represents a 10%premium to our base case multiple)on our 2020 adjusted earnings estimate.This incorporates our bull market assumption of+15%above our current 8%annualized equity market assumption,an additional fed rate hike compared to our estimate,and a 5%increase to ou
42、r net new asset growth forecast.Our Grey Sky Scenario(US$)46.00Our Grey Sky valuation of$46 is based on a 12.6x multiple(which represents a 10%discount to our base case multiple)on our 2020 adjusted earnings estimate.This incorporates our conservative market assumptions of 15%below our current 8%ann
43、ualized equity market assumption,one less fed rate hike in 2019 compared to our estimate,and a 5%decrease to our net new asset growth forecast.Share price performanceAMTD.OQS&P 500 INDEXApr-18Jul-18Oct-18Jan-194550556065On 11-Jan-2019 the S&P 500 INDEX closed at 2589.09Daily Jan11,2018-Jan11,2019,01
44、/11/18=US$53.74Source:Company data,Thomson Reuters,Credit Suisse estimates14 January 2019US Asset Managers&Brokers7Americas/United StatesBrokerage E*Trade Financial Corp(ETFC)RatingOUTPERFORMPrice(11-Jan-19,US$)47.80Target price(US$)58.0052-week price range(US$)65.99-41.27Market cap(US$m)12,153Enter
45、prise value(US$m)12,153Target price is for 12 months.Research AnalystsCraig Siegenthaler,CFA212 325 3104craig.siegenthalercredit-Steven Castano212 325 2653steven.castanocredit-Ari Ghosh212 325 7113ari.ghoshcredit-Gautam Sawant,CFA212 325 3422gautam.sawantcredit-Model MaintenanceAdjusting Estimates/T
46、P:We increased our 2018/2019 EPS estimates to$3.84/$4.10 from$3.83/$3.99 due to higher projected cash sweep revenues&cash balances for 2018/2019.Our Target Price of$58 is based on a 13x multiple on our 2020 EPS estimate.Risks to the stock include 1)rising deposit betas;2)lower cash balances.Share pr
47、ice performanceETFC.OQS&P 500 INDEXApr-18Jul-18Oct-18Jan-1940506070On 11-Jan-2019 the S&P 500 INDEX closed at 2589.09Daily Jan11,2018-Jan11,2019,01/11/18=US$52.96Quarterly EPSQ1Q2Q3Q42017A0.480.700.49 0.482018E0.880.941.00 1.022019E-Financial and valuation metricsYear12/17A12/18E12/19E12/20EEPS(CS a
48、dj.)(US$)2.153.844.104.48Prev.EPS(US$)-3.833.994.46P/E(x)22.312.411.710.7Relative P/E(%)115798081Revenue(US$m)2,366.02,864.13,013.63,235.8 Dividend(current,US$).6Shares Outstanding(m)254Dividend yield(%)-Source:Company data,Thomson Reuters,Credit Suisse estimates14 January 2019US Asset Managers&Brok
49、ers8E*Trade Financial Corp (ETFC)Price(11 Jan 2019):US$47.8;Rating:OUTPERFORM;Target Price:58.00;Analyst:Craig SiegenthalerIncome Statement12/17A12/18E12/19E12/20ENet interest income1,4851,8331,9782,175Fee income8811,0311,0361,060Trading income0000Total revenue2,3662,8643,0143,236Comp expense5466306
50、60706Other expense806775799844Total expenses1,4701,5431,5961,688Pre-provision profit8961,3211,4181,547Loan loss provisions(168)(94)(70)(30)Other non-recurring pre-tax0000Pre-tax profit1,0641,4151,4881,577Minority interest-Net profit(reported)5891,0101,0461,124Net profit(adjusted)5891,0101,0461,124Pe