On Monday, Piper Sandler adjusted its price target for Virtus Investment Partners (NYSE:VRTS), traded on NASDAQ:VRTS, to $265, down from the previous target of $275, while maintaining an Overweight rating on the stock.
The adjustment follows Virtus Investment's recent earnings report, which aligned with expectations. The firm's capital flows showed considerable improvement compared to the fourth quarter of 2023 and were slightly above Piper Sandler's projections.
The firm's commentary on forward flow trends was positive, noting stability despite the market's recent fluctuations and indicating that these trends have continued into the first quarter of 2024. Despite these favorable trends, Piper Sandler has revised its adjusted earnings per share (EPS) forecasts for Virtus Investment for the years 2024 and 2025. The new EPS estimates are set at $26.28 and $29.12, respectively, a decrease from the prior estimates of $27.83 and $30.93.
Piper Sandler expressed confidence in maintaining the Overweight rating for Virtus Investment, citing the company's appealing valuation at a discount. The firm's analysts found the discussion around capital flows during Virtus Investment's earnings call to be particularly reassuring. The revision of the price target to $265 is based on an unchanged multiple of approximately 6.5 times the enterprise value to the adjusted EBITDA estimate.
The reduction in the adjusted EBITDA forecast, which led to the lowered price target, was primarily attributed to market conditions, with broader markets experiencing a downturn of around 3% in April. Piper Sandler's reevaluation reflects both the recent performance and the anticipated financial trajectory of Virtus Investment Partners.
InvestingPro Insights
In light of Piper Sandler's recent analysis, it's worth considering a few additional insights from InvestingPro. Virtus Investment Partners (NASDAQ:VRTS) has demonstrated a strong commitment to rewarding shareholders, having raised its dividend for 6 consecutive years and maintained dividend payments for 11 consecutive years. This is a testament to the company's financial stability and dedication to returning value to its investors.
From a valuation perspective, VRTS is currently trading at a P/E ratio of 13.71, which seems high relative to near-term earnings growth, with a PEG ratio of 16.35. This may indicate that the stock's price is factoring in more optimistic growth expectations than what near-term earnings can justify. Despite this, analysts predict the company will be profitable this year, and it has indeed been profitable over the last twelve months.
InvestingPro data shows that VRTS has experienced a significant price uptick over the last six months, with a 33.25% return, showcasing strong market performance. However, the short-term metrics indicate a slight downturn with a 1-week price total return of -1.81% and a YTD price total return of -5.13%.
For readers looking to delve deeper into Virtus Investment Partners' financials and future prospects, InvestingPro offers additional analysis and tips. To explore these insights and make informed investment decisions, visit https://www.investing.com/pro/VRTS. And don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 more InvestingPro Tips available that could provide further context and guidance for potential investors.
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