After their latest quarterly report, things couldn't have been much worse for Eaton Vance (NYSE:EV) concerning their organic growth outlook, as they were at this lowest level in a decade.
Ticonderoga, which maintains a "Sell" rating on Eaton, said, "EV reported EPS of $0.41, ahead of our $0.39 estimate. Upside was driven by better other revenue and a slightly lower compensation ratio. AUM of $185.2 billion and net flows of $3.2 billion were already released...Outflows were $762 million, worse than our estimate and the worst organic growth rate this decade. Large cap value underperformance and pressure from ETFs lead us to believe this category will remain challenged."
"Bottom line. Solid headline quarter and solid flows—however, we think the outlook is softening with equity outflows the largest in a decade and a likely slowdown of at least 40-60% in fixed income flows next year. EV is still trading at a 13% premium. We think it should be in line or $25."
Even though Eaton Vance will get the headlines they best estimates, their equity flows are a major challenge going forward.
Eaton closed Tuesday at $29.47, falling $1.13, or 3.69 percent. Ticonderoga has a price target of $25 on them.
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