WisdomTree Downgraded At Susquehanna On Valuation, 'Slower Currency Hedged Outlook'

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In a report published Thursday, Susquehanna analyst Doug Sipkin downgraded the rating on
WisdomTree Investments, Inc.
WETF
from Positive to Neutral, while lowering the price target from $26 to $23. The analyst believes that currency hedged product flows are likely to moderate in the near future. According to the Susquehanna report, the slower currency hedged outlook is based on multiple factors, such as it currently being the later stages of incremental quantitative easing. "We believe an increasing amount of Central Bankers are expressing their frustration and concern with the strong dollar. While we are not certain Central Bank speak is enough to reverse positive dollar trends, we do note that there are more powers beginning to voice their concern against the dollar," Sipkin stated. In addition, the uncertainty related to Greece and China are having an impact in Europe and Japan. However, the analyst believes that the company's "long-term story" remain healthy. "PWC recently projected ETFs could grow to $5 trillion by 2020. Today, WETF has roughly 2 percent share of the global market. If WETF maintains that share, AUM could be $105 billion if PWC's forecast is correct," the Susquehanna report said. Also, WisdomTree has "broad exemptive relief" to formulate its own indices. Moreover, the company offers the three main indices that investors are mostly concerned about, transparency, higher liquidity and better tax efficiency. The full year EPS estimates for 2015 and 2016 have been lowered from $0.62 and $0.88 to $0.60 and $0.85, respectively.
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Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsDoug SipkinSusquehanna Financial Group
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