Waddell & Reed price target cut at Citi

• Forget whether Waddell & Reed (WDR +2.4%) is up for sale. Citi's William Katz says the more relevant question is whether the company is salvageable.
• Even if the company "can stem the flow bleeding, we suspect a much smaller WDR is likely, making it difficult for a strategic buyer to step in right now."
• If the year ended today, the $20.1B Asset Strategy Fund would be down for a 2nd straight year - not good for an absolute return oriented fund designed to collar the downside along with the upside.
• Look for further run-off in the company's higher-margin funds, says Katz, who believes shrinking AUM merits corporate downsizing, not aggressive buybacks.
• Katz maintains his Sell rating and lowers the price target to $29 from $32.50.