Janus Capital Was Just Upgraded At Citi; But Analysts Gave 3 Reasons Why The Stock Is Not A Buy

Shares of Janus Capital Group Inc

are down after analysts at Citi upgraded the stock from Sell to Neutral, but provided reasons not to Buy it. In the report, issued Thursday, the firm provides three reasons for the upgrade, and three more reasons not to buy the stock, even in spite of the promotion. Why Now? The upgrade is based on three motives: 1) "Further evidence of building equities flow traction" 2) "The pick-up in equities volumes comes at a time of continued mixed sector trends and likely calls for a more competitive P/E multiple" 3) The analysts raised their EPS forecast accounting for "above trend markets and volumes, further widening out the P/E multiple versus peers." While the firm continues to think the market is overestimating the FI flow opportunity related to Mr. Gross –and recent data supports this view, they say- "the bullish narrative is likely to further shift toward improving equities, and possibly trumping our previous thesis, particularly as the Fed remains on hold and keeping a bid under risk assets," they explain. Besides the upgrade, the firm also boosted its target price from $14.50 to $17, to reflect their EPS estimate revision for 2016. Why Not A Buy? Despite the upgrade, the stock is still not a buy. Citi provides three reasons for this: 1) They see uneven trends within asset classes. 2) Margins will likely feel some pressure coming from the need to spend/re-invest. 3) Citi continues to believe "the market is overshooting on potential Bill Gross related flows."