DWS Earnings: Solid Inflows but Margin and Cost Pressure Remains

No-moat DWS reported a decent 5% growth in assets under management, or AUM, for the first quarter of 2024 compared with year-end 2023 and 12% growth compared with first-quarter 2023, leading DWS toward EUR 941 billion in total AUM. Most of the AUM increase is attributable to positive market dynamics and currency effects in fourth-quarter 2023 and first-quarter 2024, however, client net flows remained positive, as well. While we applaud DWS’ fundraising efforts, we are concerned about margin pressure and we are skeptical that it can achieve its cost/income target. We will update our model shortly, and that could result in a change to our EUR 48 per share fair value estimate. After a 30% rally in its share price, DWS is now trading at a 20% discount to our fair value estimate, which suggests that some upside remains.