SHARES in wealth manager and life insurer AMP have remained under a cloud in recent months, even as other companies reliant on buoyant equities markets have shown more resilience.
While the strong dollar and global jitters have knocked 11 per cent from the ASX200 index over the past year, AMP shares have tumbled 24 per cent to close at $4.26 yesterday.
In addition to the usual worries about a cautious market, investors have fretted about the integration of insurer AXA Asia Pacific following AMP's $14 billion takeover of the group last year, analysts said.
"There is always significant operational risk associated with merging two businesses, particularly ones of this size," the Commonwealth Bank analyst Ross Curran said.
The company's success in placing new management teams and reorganising structures for its AMP Financial Services and investment manager AMP Capital divisions has failed to spur higher prices.
What's key to a recovery in AMP's share price is the kind of efficiencies it achieves from the AXA takeover, analysts said. To date, the company has seen post-tax cost-savings of $55 million, compared with the $30 million expected. But net profits fell 11 per cent to $688 million last year.
Mr Curran lowered his rating for AMP to "hold" in February because of softer investment flows, skittish sentiment and rising capital requirements demanded by regulators.
Others believe AMP will be in a much better position to benefit from its acquisition if and when a broader sharemarket recovery takes hold. "Investors shouldn't annualise a terrible year in markets," Bell Potter analyst Lafitani Sotiriou said.
He believes AMP could rise to $5.80 within a year. "If markets improve there is a leverage in the AMP model," he said.
Mr Sotiriou believes AMP can save $149 million over four years, as the benefits of the AXA merger are fully realised. The government's plan to increase the superannuation guarantee from 9 to 12 per cent should also send more funds into AMP's superannuation products.
Finally, AMP is expected to benefit from its alliance with Japanese megabank Mitsubishi UFJ, giving it a higher profile in Japan's savings industry.
AMP sources 7 per cent of its funds under management in fast-growing Asia. China and India are also considered potential markets for the group.