UPDATE: Credit Suisse Upgrades Janus Capital Group

Credit Suisse upgraded Janus Capital Group Inc JNS Tuesday from Underperform to Neutral and set a $19 price target.

Analysts led by Craig Siegenthaler based their upgrade “on new guidance from JNS's CFO on its 3Q14 earnings call” and estimated “the company could be expecting a $15-25B y/y increase in sales levels in 2015.”

The growth appears to be “driven mostly by its Global Unconstrained Bond Fund (Bill Gross), while Flexible Bond Fund (Gibson Smith), Asset Allocation (Ashwin Alankar, Myron Scholes), and its new ETP (exchange traded product) business (VelocityShares) should also have a positive y/y impact on total flows.”

The analysts also noted “that JNS's mutual fund flows have already inflected positive for two consecutive months now – after losing $24B of cumulative assets through negative net flows over the last three years.”

Siegenthaler used 2017 estimated EPS of $1.34 to obtain the $19 price target and assumed a 16.0x PE and 10 percent discount rate.

The analyst note concluded that “while low EPS in '15 is certainly a risk, we think JNS's relative valuation will improve significantly if sales/net flows can improve to the $15B range in 2015.”

Janus Capital Group recently traded at $15.56, down 1 percent.