On Wednesday, Piper Sandler maintained an Overweight rating on Virtus Investment Partners (NASDAQ:NYSE:VRTS) and increased the price target to $275 from the previous $264. This adjustment was made following a review of the company's February Assets Under Management (AUM) release and market data up to March 21.
The firm's analyst cited recent flow data from the first quarter of 2024 as a positive sign, despite a generally cautious stance on the traditional asset management sector due to historical mutual fund flow trends. Virtus Investment Partners is still seen as undervalued, and the raised price target reflects a valuation of approximately 6.5 times the estimated adjusted EBITDA for 2024.
The new price target is based on the expectation of improved performance, as indicated by the higher estimates in the analyst's model. The evaluation of the company's financial prospects took into account both the AUM information and the flow and market data up to late March.
The Overweight rating suggests that Piper Sandler expects Virtus Investment Partners to outperform the average return of the stocks the firm covers over the next 12 to 18 months. The target price revision implies confidence in the company's ability to grow its earnings and deliver shareholder value.
The company's stock price will continue to be watched closely by investors as it responds to market conditions and the firm's financial performance throughout the rest of the year.
InvestingPro Insights
Following Piper Sandler's optimistic outlook on Virtus Investment Partners, InvestingPro data further enriches the narrative with key financial metrics. The company's market capitalization stands at approximately $1.7 billion, reflecting its substantial presence in the investment management sector. Notably, Virtus Investment Partners boasts a P/E ratio of 13.38, suggesting that the stock may be trading at a reasonable valuation relative to its earnings. This is in line with the InvestingPro Tip highlighting the company's low P/E ratio compared to near-term earnings growth, which could signal an attractive investment opportunity for value-oriented investors.
InvestingPro data also reveals a robust gross profit margin of 40.66% for the last twelve months as of Q4 2023, indicating the company's effectiveness in managing its cost of goods sold and maintaining profitability. Additionally, the dividend yield as of the most recent data point stands at 3.18%, with a significant dividend growth of 15.15% in the same period, underscoring the company's commitment to returning value to shareholders. This is further corroborated by the InvestingPro Tip that Virtus has not only maintained but also raised its dividend for 6 consecutive years.
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