The past week has been a brisk one for sell-side analysts updating their views on shares WisdomTree Investments Inc. (NASDAQ:WETF), the fifth-largest U.S. issuer of exchange traded funds.
On Tuesday, it is Keefe, Bruyette & Woods analysts Robert Lee and Ann Dai out with commentary on WisdomTree. KBW rates the stock Market Perform with a $25 price target, well above current. Shares of New York-based WisdomTree are off about 6 percent at time of writing and labor around the $17.60, implying upside of more than 42 percent from current levels if KBW's price target proves accurate.
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Net outflows of -$900mn in the week ending 8/28 have reduced firm-wide QTD flows to +$900mn. Flows trends remain dominated by currency-hedged strategies, which generated +$2.3bn of inflows through 8/21 and then generated -$400mn of outflows in the week ending 8/28, bringing QTD flows to +$1.9bn. Emerging Markets outflows have been -$860mn QTD, including -$205mn in the week ending 8/28. U.S. Equities strategies have seen -215mn of outflows QTD including -$140mn the past week, said KBW in the note.
Year-to-date, WisdomTree's WisdomTree Europe Hedged Equity Fund (NYSE:HEDJ) is the top asset-gathering ETF with inflows of $15.5 billion while only five ETFs have hauled in more new investments than the $4.7 billion added by the WisdomTree Japan Hedged Equity Fund (NYSE:DXJ).
WisdomTree had $60.7 billion in assets under management as of August 20. HEDJ and DXK combined for $35.7 billion in assets asof August 25. Some analysts perceive WisdomTree as dependent on those two ETFs to drive asset growth, leading to the assertion that shares of the ETF provider are vulnerable to declines in the U.S. dollar.
AUM as of 8/28 were about 13% below our current quarter-end forecast driven by negative asset returns and weaker flows. With 1/3 of the quarter remaining and heightened volatility, AUM and flow trends could still change substantially, however, to provide some context for the potential impact to earnings from lower than forecast QTD AUM, we estimate that back-of-envelope, every $1bn variance in AUM equates to ~$0.01 of EPS, annually, adds KBW.
Of the most recently released analyst views on WisdomTree, KBW's places in the middle in terms of enthusiasm. Last week, Citigroup slapped a Sell rating on the stock while paring its price target by 50 percent.
However, just a couple of days after Citigroup's note on WisdomTree was released, Jefferies was out with a note on the stock entitled Time to Back up the Truck where the firm revealed a Buy rating and a $31 price target on WisdomTree.
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