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Shares of T Rowe Price rose by more than 6 per cent in pre-market trading on Friday after the large US asset manager reported profits that handily beat expectations.
The Baltimore-based group said its adjusted diluted earnings per share were $2.17 in the third quarter, about 23 per cent higher than Wall Street estimates of $1.77 and 17 per cent more than the same quarter a year ago. Net profit was $499.5mn, well above the $430.6mn it reported in the third quarter of 2022.
Profits increased as T Rowe’s net revenues rose by about 5.2 per cent year on year to nearly $1.7bn, while total adjusted operating expenses increased 3.2 per cent. The manager’s investment advisory fees ticked up by about 1.5 per cent, or roughly $22mn, and the firm also reported a $65mn increase in accrued carried interest.
“Third-quarter trends were largely similar to what we experienced earlier in the year — investment performance was solid and particularly strong in our largest franchises,” said chief executive Rob Sharps in a statement before the firm’s scheduled call with analysts. He added that T Rowe Price’s “flows remain under pressure”.
T Rowe’s stock was down about 15 per cent this year as of Thursday.
The firm had previously reported quarterly net outflows of $17.4bn, which predominantly was driven by about $19.7bn in redemptions from equity strategies, which overshadowed other asset classes.
T Rowe Price’s reported assets under management of about $1.3tn as of September 30 were down about 3.8 per cent from the previous quarter but up about 9.5 per cent year-over-year. Assets peaked at $1.7tn in 2021.
Company officials over the past year have attempted to cut down costs with lay-offs. Sharps cautioned on Friday on a call with analysts that he expected net flows to remain negative through 2023, but he was “very optimistic that the flow picture will improve in 2024”.
Sharps said he was optimistic about the recent performance of the active manager’s funds and the prospects of competing against passive managers, which have attracted assets in recent years. A rally concentrated among several large growth stocks has made it difficult for diversified active funds to outperform.
Additional reporting by Madison Darbyshire in New York
