Wells Fargo Cuts Valuation Range on Waddell & Reed (WDR), Lowers AUM Expectations
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Price: $24.98 --0%
Rating Summary:
0 Buy, 13 Hold, 4 Sell
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
0 Buy, 13 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wells Fargo is maintaining its Market Perform rating on shares of Waddell & Reed (NYSE: WDR), but is lowering its valuation range from $34-$36 to $32-$33.
The company highlighted that as of end of August, AUM was $87 billion and was around $84 billion as of September 13, 2011. This caused the firm to lower its September AUM estimate from $89.4 million to $84.3 million.
The firm notes that a majority of the news at the company's conference call was positive and is forecasting positive inflows for the third quarter as a result. Although the Wells Fargo estimates inflows of $459 million, well below second quarters $1.7 billion in inflows, it notes that any positive inflows right now is a sign of strength and a good thing.
Management reaffirmed its belief of $200-$220 million in free cash flows from operations in 2011. That along with its increased quarterly dividend, which the Wells Fargo believes will increase again to $0.21 in Q1 2012, the firm is forecasting a payout ratio of 34 percent for 2012.
Wells Fargo anticipates that the buybacks will continue, but is lowering its 2011 and 2012 EPS Estimates from $2.28 and $2.64 to $2.22 and $2.47 to account for the macro trends.
An analyst at Wells Fargo comments, "Shares currently trade at a premium to the asset management peer group, consistent with its historical valuation. However, considering the concentration of AUM in Waddell and Reed's flagship Asset Strategy fund and the recent price appreciation, we believe that the stock is fairly valued at this time."
For more ratings news on Waddell & Reed click here and for the rating history of Waddell & Reed click here.
Shares of Waddell & Reed closed at $29.07 yesterday.
The company highlighted that as of end of August, AUM was $87 billion and was around $84 billion as of September 13, 2011. This caused the firm to lower its September AUM estimate from $89.4 million to $84.3 million.
The firm notes that a majority of the news at the company's conference call was positive and is forecasting positive inflows for the third quarter as a result. Although the Wells Fargo estimates inflows of $459 million, well below second quarters $1.7 billion in inflows, it notes that any positive inflows right now is a sign of strength and a good thing.
Management reaffirmed its belief of $200-$220 million in free cash flows from operations in 2011. That along with its increased quarterly dividend, which the Wells Fargo believes will increase again to $0.21 in Q1 2012, the firm is forecasting a payout ratio of 34 percent for 2012.
Wells Fargo anticipates that the buybacks will continue, but is lowering its 2011 and 2012 EPS Estimates from $2.28 and $2.64 to $2.22 and $2.47 to account for the macro trends.
An analyst at Wells Fargo comments, "Shares currently trade at a premium to the asset management peer group, consistent with its historical valuation. However, considering the concentration of AUM in Waddell and Reed's flagship Asset Strategy fund and the recent price appreciation, we believe that the stock is fairly valued at this time."
For more ratings news on Waddell & Reed click here and for the rating history of Waddell & Reed click here.
Shares of Waddell & Reed closed at $29.07 yesterday.
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