Risk/reward is "tipped meaningfully to the upside," says analyst William Katz, upgrading WisdomTree (NASDAQ:WETF) to Buy from Neutral. He sees clear signs that fund flows and margins are set to turn higher.
As for another catalyst, Katz believes a sale of the company "may be inevitable."
His new price target of $10.50 suggests nearly 17% upside.
Mulling yesterday's report of buyout interest for Legg Mason (NYSE:LM), Citigroup's William Katz says it's only natural to focus on Asian buyers given the Softbank's recent purchase of Fortress and Shanda's sizable stake in Legg.
Though he wouldn't rule anything out, Katz sees another such deal as unlikely, and says he would fade the news.
If speculation continues to swirl in the asset management sector, Katz would look to WisdomTree (NASDAQ:WETF) and Waddell & Reed (NYSE:WDR) as two of the more likely sale candidates.
The company's Q4 miss was due to higher than expected compensation expense and a goodwill impairment charge, says analyst Surinder Thind, but management says the expense build is mostly over and they're ready to convert those investments into revenue.
2017 has gotten off to a solid start, with net inflows of about $350M in January - that pace over the entire quarter would mean $1.05B of inflows vs. Jefferies' estimate of $875M.