(March 29 – 16:45 ET) – Merrill Lynch Canada Inc. is impressed with the performance of AGF Management Ltd. The brokerage is rating AGF’s stock as a long-term buy, short-term accumulate.
The firm likes AGF’s recent progress in growing revenues and whittling costs down. The firm beat street estimates by 4¢ when it reported first quarter earnings per share of 52¢ earlier this week. Merrill says AGF’s revenue grew 40% year over year, 4% faster than it expected, thanks to the continued shift from all asset classes to foreign equity funds and its strong distribution situation. AGF’s distribution deal with Investors Group is starting to materially boost the bottom line.
Costs grew slower than revenues, allowing AGF to up its margin to 19%. Also the firm has recorded 60% of its large ad budget in the first quarter so costs are expected to grow much slower through 2000.
Merrill says it is reviewing its estimates for AGF for possible upside revision. Although the valuation is currently at Merrill’s target.
-IE Staff