UPDATE: Sterne Agee Downgrades Waddell & Reed Financial

According to a research report published earlier today, Sterne Agee has downgraded Waddell & Reed Financial WDR from Buy to Neutral. In the report, Sterne Agee commented, “We continue to believe one of the more attractive elements of the WDR story to investors with a longer-term investment horizon is the margin expansion story. The company's margin goal remains 30% (500+ bps expansion vs. 2011) which seems reasonable given the scale disadvantages it faces vs. larger peers currently. In addition WDR appears to have turned a corner from a niche company with one key fund to an asset manager with a suite of products with broad appeal and solid performance records. We would welcome a more balanced flow picture (asset diversification will take longer) even if WDR can't regain its historical double-digit organic growth rate.” Sterne Agee maintains its $34 PT on Waddell & Reed, which closed yesterday at $33.23.