During today's afternoon trading session, Invesco plummeted to $19.5 per share. It's still 11.15% above its mean target price of $17.54, so there may still be room for more downwards movement -- even after today's -1.4% drop. Analysts are giving the Asset Management stock on average rating of hold, with target prices ranging from 11.5 to 22 dollars per share.
To understand the market's outlook on the stock, we can look at Invesco's short interest: the proportion of the share float that is tied to short positions. Behind each short position is an investor who believes that the stock will decline in the future. Here, the stock's short interest is 5.3% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Invesco is to look at the percentage of institutions that are invested in the stock. In this case, 92.5% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is negative market sentiment towards Invesco because of an analyst belief that shares are overpriced, a hold rating, an average amount of shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about IVZ:
It has trailing 12 month earnings per share (EPS) of $1.99 per share
Invesco has a trailing 12 month Price to Earnings (P/E) ratio of 9.8 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 0.8 in contrast to the S&P 500's average ratio of 2.95
Invesco is a Financial Services company, and the sector average P/E and P/B ratios are 13.34 and 1.95 respectively