On Monday, Morgan Stanley made a slight adjustment to Virtus Investment Partners' (NASDAQ:NYSE:VRTS) shares target, reducing it to $223 from $224. The firm has maintained its Underweight rating on the asset management company's stock.
The decision follows Virtus Investment's first-quarter earnings for 2024, which prompted the analyst at Morgan Stanley to revise downward the adjusted earnings per share (EPS) estimates.
The revised forecast for the second quarter of 2024 shows a 2.2% decrease in adjusted EPS to $6.91 from the prior estimate of $7.07. The analyst also adjusted the full-year 2024 earnings expectations, with a 1.6% reduction in adjusted EPS to $27.23, down from the previous forecast of $27.68. Looking further ahead to 2025, the adjusted EPS estimate has been lowered by 0.6% to $29.77 from $29.95.
This price target adjustment of just -0.4% to $223 from $224 is attributed to softer revenues as observed in the company's recent earnings results. Despite the modest change, the firm's stance remains Underweight, indicating a cautious outlook on the stock's potential performance relative to the market or its sector peers.
The updated figures reflect the analyst's assessment of the company's near-term financial prospects based on the latest available earnings data. The Underweight rating suggests that the analyst believes the stock might underperform the average total return of stocks in the analyst's coverage universe over the next 12 to 18 months.
InvestingPro Insights
As investors digest the revised forecasts from Morgan Stanley, it's worth noting some additional metrics and insights from InvestingPro that could provide a broader context to Virtus Investment Partners' (NASDAQ:VRTS) financial health and stock performance. The company's commitment to shareholder returns is evident, with InvestingPro highlighting that VRTS has raised its dividend for 6 consecutive years and has maintained dividend payments for 11 consecutive years. This consistency in dividend payments, paired with a current dividend yield of 3.34%, may appeal to income-focused investors.
On the valuation front, VRTS is trading at a P/E ratio of 13.71, which is relatively high when considering the near-term earnings growth, as indicated by the PEG ratio of 16.35. This could suggest that the stock is priced optimistically in terms of growth expectations. Nonetheless, the company has been profitable over the last twelve months, and analysts predict it will remain profitable this year, which might provide some reassurance to investors concerned about future earnings potential.
InvestingPro also reveals a significant price uptick over the last six months, with a 33.25% total return, reflecting a strong market sentiment during that period. This, combined with a robust return over the last five years, could indicate underlying momentum that long-term investors may find encouraging.
For those considering an investment in Virtus Investment Partners or seeking to deepen their analysis, InvestingPro offers additional insights. There are currently 6 more InvestingPro Tips available for VRTS, which can be accessed through the platform. To explore these tips and gain a more comprehensive understanding of VRTS's investment potential, interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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