BMO Upgrade Seeing an “attractive risk-reward” and “meaningful upside,” BMO Nesbitt Burns analyst tienne Ricard upgraded Fiera Capital Corp. (FSZ-T +5.18%increase) to “outperform” from “market perform” previously.
In a research note, he listed " five sources of earnings upside potential for which minimal credit is granted at current valuations. They are: “First, improving investor sentiment for public market strategies considering stabilizing bond yields/equity markets year-to-date. Second, potential for improving flows from the regionalization of Fiera’s distribution resources (95 per cent-plus of equity/fixed income AUM outperforms benchmarks over 5 years). Third, AUM growth capacity at StonePine ($51-billion in AUM vs. $66-billion as of Q4/21). Fourth, fee rate upside given FSZ believes it has ‘differentiated strategies [with] pricing power.’ Lastly, continued cost optimization ‘as [FSZ] looks to drive efficiency.’”
Believing its “price is fundamentally disconnected from value with industry comparables that support a $9-15 per share value, a material disconnect to market,” Mr. Ricard maintained a target of $8.50. The average is $7.97.
“Our valuation framework is mindful of AUM attrition risk at StonePine and values FSZ at the low end of industry comparables,” he said.