Goldman Sachs Lowers Franklin Resources (BEN) Price Target To $120

Goldman Sachs Group analysts Richard Ramsden, Brian Foran, Daniel Harris and Jessica Binder Graham maintained their Buy rating of Franklin Resources, Inc (NYSE: BEN) but removed the stock from its Conviction Buy List.

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They also lowered the price target to $120 per share, down from the previous price target of $136.

The analysts noted that they still recommend the shares of Franklin Resources, Inc and that the stock has a great deal of upside.

However, they also noted that the stock had a strong retail bias, which posed a near-term risk.

The Goldman Sachs Group analysts wrote, "we view the firm as a flow share “gainer”, trading at an attractive multiple of just 15X fiscal 2011E P/E. BEN’s strong balance sheet ($3 billion in cash) and ample free cash flow generation afford the firm financial flexibility for share buybacks (10% of market cap in cash), dividends, or accretive acquisitions. Over the near term, however, BEN’s higher retail mix (70% of AUM is retail) suggests equity flows could be choppy in the coming quarters, offset by the fact that about 50% of AuM (and nearly 100% of flows) are in stickier (and still-flowing) fixed income-oriented funds. Our 12-month P/E based price target is $120, down from $136 on lower estimates. Key risks: deceleration in bond flows, significant exposure to non-US investments."