Jefferies Downgrades Artisan Partners To Hold, Growth 'Unlikely' This Year

On Monday Jefferies issued a company report on Artisan Partners Asset Management Inc. APAM after investment performance has come below expectations. Jefferies downgraded Artisan Partners from Buy to Hold and lowered their price target from $43 to $34.

Surinder Thind and Daniel Fannon, analysts at Jefferies, wrote, "Our previous Buy rating was predicated on flows trending towards breakeven at the end of 2015, which has not occurred. With the majority of AUM in soft-closed funds, there is not sufficient scale amongst positively flowing products to generate enough sales to offset the current elevated redemption levels, which will likely persist...Based on current performance, we believe 2016 will be another challenging year for growth and a turnaround is not likely until at least 2017."

Jefferies believes that Artisan Partners' US Value fund one, three, and five-year performance will perform in the bottom quartile relative to their peers. The poor fund performance combined with the outflow of funds may weigh down the performance of the stock.

Furthermore, Jefferies sees few signs of positive organic growth due to the firm seeing 6 consecutive quarters of net outflows. However, Jefferies does note that Artisan Partners recently launched multiple funds in the past few years that could be positive catalysts going forward if they outperform competitor's funds.

Currently, Artisan Partners is trading at $30.87, down 2.80 percent.