AMP shares rebound 64%: Buy, sell or hold?

AMP Ltd (ASX: AMP) shares jumped almost 10% higher on Thursday, closing the day at $1.90 a piece.

The impressive daily increase came off the back of a positive first-half earnings update out of the company on Thursday morning.

The financial services company said in a statement to the ASX that it expects underlying net profit to come in at $170 to $180 million. This is significantly higher than the $131 million reported for the same period last year. Investors rushed to snap up the stock, sending the share price flying.

The news isn't the only tailwind AMP shares have enjoyed over the past couple of months. 

After crashing to an annual low in mid-March, the stock has slowly but steadily recovered the losses shed. At the time of writing, the shares have now rebounded 64% from their low, and are now up around 4% for the year-to-date.

Why have AMP shares rebounded from their low?

AMP shares crashed around 26% in February after it posted a disappointing FY25 result. It came in far below expectations, and investors were disgruntled.

Ongoing geopolitical tensions and concerns about Australia's inflation data rate also weighed heavily on financial shares throughout the first half of the year.

Later in April, AMP's first-quarter update was a little more positive. The company reported 45% growth in Platforms' net cash flows and improved Superannuation & Investments (S&I) net cash outflows in April. The result proved that business growth is underway and revealed momentum across several key divisions. 

Investors were happy with the results and some confidence was restored. Now it looks like investors have become increasingly confident that the company's turnaround can translate into a better financial performance and improved shareholder returns.

AMP has also benefited from renewed expectations that the Reserve Bank of Australia will start to ease interest rates. Lower interest rate expectations generally boost sentiment for financial stocks like AMP. 

Are they a buy, sell or hold now?

The experts are mostly bullish on the outlook for AMP shares over the next 12 months. But after Thursday's huge share price spike, it's unclear exactly what upside we can expect next.

Market Index data shows the majority of brokers have a buy rating on AMP shares. The $1.79 average target price, however, now implies a potential 2% downside ahead.

TradingView data shows something very similar. The majority (six out of 10) have a buy or strong buy rating on AMP shares. Another three rate the stock as a hold.

The average $1.82 target price now implies a potential 4% downside ahead. Although some think that the shares have the potential to climb another 3% higher to $1.95 a piece.

I expect that after yesterday's news, and share price surge, we may see a flurry of brokers and analysts revise their expectations for AMP shares in coming days.

The post AMP shares rebound 64%: Buy, sell or hold? appeared first on The Motley Fool Australia.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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