On Friday, Evercore ISI adjusted its price target for asset management firm Cohen & Steers (NYSE:CNS), lowering it to $73.00 from the previous $78.00. Despite this change, the firm maintained its Outperform rating on the stock.
The revision follows a quarter that met expectations, yet saw the company's shares dip by 3.5% intraday before rallying in the last hour. The decline was attributed to the anticipation of downward revisions in earnings models due to weaker market conditions, particularly in U.S. REITs.
The analyst from Evercore ISI noted that the operational and flow outlooks for Cohen & Steers have remained largely unchanged. Key points highlighted include an improvement in flows each month during the first quarter, with wealth management showing positive results for four consecutive months, largely driven by U.S. REITs and core preferreds.
Additionally, the company boasts a robust unfunded institutional pipeline valued at $1 billion and views the $2.2 billion of institutional exits in the first quarter as an anomaly.
The firm also pointed out several positive indicators for Cohen & Steers, including rising interest in REITs and infrastructure investments in Asia, share gain opportunities in Australia, increased activity in the Middle East, and potential for institutional involvement in Japan.
Management at Cohen & Steers believes that overall REIT prices have reached a bottom and are entering a new return cycle. The company is also focusing on long-term growth through new product development, including a global preferred debt SICAV, a future-of-energy strategy, and active ETFs.
The analyst mentioned potential short-term challenges such as recent rate movements causing some clients to pause and a shift by certain preferred clients towards private credit. However, they emphasized the enduring nature of the long-term flow story for Cohen & Steers, supported by an expectation of declining interest rates, the firm's real assets menu, consistent strong alpha, and new private investment capabilities.
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