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On Monday, Canaccord Genuity began coverage on Sprott Inc . (TSX:SII:CN) (OTC: SPOXF (OTC:SII)) with a Buy rating and set a price target of C$67.00. The firm highlighted Sprott's significant transformation over the past five years, transitioning from a broad asset manager to a specialized, mining-focused entity. This shift has allowed Sprott to offer a distinct value proposition to its fund investors.
According to Canaccord Genuity, Sprott has achieved considerable growth in assets under management (AUM) through the development of its physical trusts, leading to increased fee revenues and strong underlying earnings power. The firm anticipates that Sprott's management will further propel growth through organic capital inflows and an expanded product suite.
Canaccord Genuity's analysts believe that Sprott has established itself as an 'all weather' business, equipped to succeed in various macroeconomic environments. The firm's forecasts take into account insights from Canaccord Genuity's Mining Equity Research team, which influences their expectations on resource pricing.
The valuation approach used by Canaccord Genuity involves a 22x next twelve months (NTM) +1 price-to-earnings (P/E) multiple. This reflects a premium compared to Canadian asset managers but remains below that of specialty asset management peers and aligns with Sprott's historical trading range.
The firm's positive outlook on Sprott is based on its competitive moat, fund structure, and diversification, positioning it for continued robust performance.
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