Citing its valuation, Desjardins Securities analyst Gary Ho downgraded Fiera Capital Corp. to “hold” from “buy” ahead of the Aug. 11 release of its second-quarter results.
After the bell on Tuesday, the Montreal-based firm reported its preliminary estimate of assets under management for June of $157.6-billion, down 10.2 per cent from the first quarter and below Mr. Ho’s estimate of $170.3-billion.
“Private alts continue to perform well with modest 0.8-per-cent AUM growth, while public market AUM decreased $18.0-billion (down 11.4 per cent),” he said. “In 2Q, the S&P 500 depreciated 16.4 per cent (down 13.7 per cent C$-adjusted) and the S&P/TSX depreciated 13.8 per cent, while the investment-grade corporate index we follow declined 9.0 per cent (down 6.0 per cent C$-adjusted).
“For perspective, AUM was down 10.2 per cent for AGF, down 10.1 per cent for IGM and down 9.8 per cent for CI (down 20.0 per cent excluding wealth management) in 2Q.”
Concurrently, he made these target adjustments for Fiera’s peers:
* Alaris Equity Partners Income Trust to $22.50 from $24.50 with a “buy” rating. The average is $24.57.
“Our investment thesis is based on: (1) AD’s diverse portfolio is well-positioned to perform, even with an uncertain U.S. macro outlook; (2) the strong pace of capital deployment recently, supported by a fortified balance sheet from the Kimco redemption and recent debt financing; (3) a healthy 60–65-per-cent payout ratio; and (4) the units remain attractively valued, trading at 0.95 times P/BV with an 8.0-per-cent distribution yield,” he said.
* Dominion Lending Centres Inc. to $5.50 from $6 with a “buy” rating. The average is $6.50.
“While sentiment on the housing/mortgage sector has waned, our positive thesis is predicated on: (1) continued strength in funded mortgage volumes; (2) reflagging efforts to add new brokers could bolster DLC growth in 2022/23; (3) a potential fintech play with Newton/Velocity, a business which is already EBITDA- and FCF-positive; and (4) a potential privatization scenario providing share price upside,” he said.