T. Rowe Price’s fourth quarter results were met with a significant negative reaction from the market, reflecting disappointment over the company’s inability to meet Wall Street’s top- and bottom-line expectations. Management attributed the quarter’s performance to elevated redemptions, particularly in its equity and mutual fund businesses, despite strong global market returns. CEO Robert Sharps acknowledged that net outflows and persistent industry-wide shifts toward lower-fee products affected the company’s asset mix and fee rates, noting, “We saw an increase in gross sales, which were higher than 2024 and up over 40% from 2023, but redemptions were greater than anticipated.” Sharps also cited weaker performance in certain strategies and client portfolio rebalancing as drivers of the outflows and margin pressure.
Is now the time to buy TROW? Find out in our full research report (it’s free for active Edge members).
T. Rowe Price (TROW) Q4 CY2025 Highlights:
- Revenue: $1.94 billion vs analyst estimates of $1.95 billion (5.4% year-on-year growth, in line)
- Adjusted EPS: $2.44 vs analyst expectations of $2.46 (1% miss)
- Adjusted EBITDA: $734.1 million vs analyst estimates of $720.6 million (37.8% margin, 1.9% beat)
- Operating Margin: 24.3%, down from 30.8% in the same quarter last year
- Market Capitalization: $21.13 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From T. Rowe Price’s Q4 Earnings Call
- Alexander Blostein (Goldman Sachs) asked about operating expense flexibility in 2026. CEO Robert W. Sharps explained that equity market returns are the main variable, with a third of expenses variable, and that cost savings initiatives are in place to fund growth investments.
- Michael J. Cyprys (Morgan Stanley) pressed on tokenization and blockchain experimentation. Eric Lanoue Veiel, Head of Global Investments, detailed a three-pronged approach—efficiency gains, product development, and distribution—and announced plans for a multi-token ETF launch next year.
- Craig Siegenthaler (Bank of America) requested updates on private alternatives in 401(k) plans. Sharps noted ongoing regulatory uncertainty and that initial adoption would be slow, with product design for the Goldman Sachs partnership targeting midyear launch.
- Dan Fannon (Jefferies) questioned target date fund outflows and future momentum. Sharps attributed outflows to M&A and shifts toward passive and blend products, but highlighted robust blend fund growth and strong January inflows.
- Benjamin Elliot Budish (Barclays) inquired about the impact of market shocks on equity flows. Sharps and Veiel responded that short-term reactions are limited, with longer-term impacts depending on market conditions and client types but no outsized exposure to software or AI-related disruptions.
Catalysts in Upcoming Quarters
In the coming quarters, our team will monitor (1) whether equity outflows begin to moderate as performance recovers and portfolio rebalancing subsides, (2) continued growth and client adoption in fixed income, alternatives, and blend target date funds, and (3) the progress of new partnerships and product launches, particularly in ETFs and global retirement markets. The evolution of regulatory developments around private alternatives in retirement accounts and the pace of digital transformation will also be watched as potential drivers of future performance.
T. Rowe Price currently trades at $96.66, down from $102.66 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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