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Bear of the Day

We are downgrading our recommendation on Invesco, Ltd. (IVZ) to Underperform based on continuously rising operating expenses and volatile capital markets. The company's first quarter 2012 earnings showed higher operating expenses.

Constantly rising operating expenses remains a concern for Invesco. Though a reverse trend was seen in the third and fourth quarter of 2011, operating expenses have been on the rise, primarily due to higher compensation costs.

Our six-month target price of $21.00 per share equates to about 11.2x the Zacks Consensus Estimate for 2012. Combined with the annual dividend of $0.69 per share, this target price implies an expected negative return of 5.6% over that period, which is consistent with our Underperform recommendation.

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