UPDATE: Goldman Sachs Downgrades WisdomTree Investments (WETF) to Sell

Goldman Sachs downgraded WisdomTree Investments (NASDAQ: WETF) from Neutral to Sell with a price target of $14.50. Alexander Blostein expects softer performance.

"We believe decelerating organic AuM growth, increasing competition in Smart Beta ETFs and product concentration will likely cap EPS in 2016, resulting in our 7% and 23% below-consensus estimates. Moreover, the increasing number of Smart Beta ETFs may pose longer-term risk to WETF’s blended fee rate as large-scale entrants compete for share. Specifically, in 2015, 132 new Smart Beta ETFs were launched, increasing the total number by 34% to 520 from 388 in 2014," said Blostein.

"Although Smart Beta flows of $36.5bn remain robust, the rate of organic growth has slowed to 18% in 2015 from 23% in 2014 and increased competition may challenge WETF’s 14% US share. Moreover, while we think WETF is well-positioned to capture secular growth in ETFs given its product set, we see increased concentration and a slowing EPS growth as risks to the stock’s premium 25x 2016 P/E vs. 11x average for other SMID asset managers. Given the expected slowdown in organic growth, we lower our 2016/17 EPS estimates which note now 22%/24% below consensus and we introduce our 2018 estimate," added the analsyt.

For an analyst ratings summary and ratings history on WisdomTree Investments click here. For more ratings news on WisdomTree Investments click here.

Shares of WisdomTree Investments closed at $13.30 yesterday.

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