Artisan Partners Upped to Strong Buy

Zacks Equity Research

On Dec 3, 2013, Zacks Investment Research upgraded Artisan Partners Asset Management Inc. (APAM) to a Zacks Rank #1 (Strong Buy).

Rationale Behind the Upgrade

Artisan Partners has witnessed positive estimate revision following the announcement of third-quarter 2013 results. Further, the company’s expected long-term earnings growth rate is 14.9%.

Artisan Partners reported third-quarter 2013 results on Oct 28. The company’s adjusted earnings per share of 67 cents beat the Zacks Consensus Estimate by 4.7%. Better-than-expected results were primarily driven by top-line growth, partially offset by higher operating expenses.

While, total revenue was $178.0 million, up 9.9% sequentially, operating expenses increased 9.6% to $124.6 million. Assets under management were $96.9 billion as of Sep 30, 2013, up from $85.8 billion as of Jun 30, 2013.

Artisan Partners’ capital deployment activities are also encouraging. On Oct 22, the company announced a second quarterly dividend of 43 cents since its initial public offering in Mar 2013. The dividend was paid on Nov 26 to Class A shareholders of record as of Nov 11.

Moreover, in Oct 2013, the company announced public offering of 4.8 million shares of Class A common stock at $56.0 per share. The company intends to utilize the proceeds of the offering to buy convertible preferred stock and preferred units of Artisan Partners Holdings LP (the company’s subsidiary) from private equity funds controlled by Hellman & Friedman LLC. Going forward, this is expected to partly reduce Artisan Partners’ interest expenses and prevent further dilution of common stock.

During the last 30 days, the Zacks Consensus Estimate for 2013 rose 2.0% to $2.52 per share. Further, for 2014, the Zacks Consensus Estimate increased 3.6% to $3.20 per share over the same time period.

Other Stocks to Consider

Apart from Artisan Partners, other investment managers worth considering include Virtus Investment Partners, Inc. (VRTS), Waddell & Reed Financial, Inc. (WDR) and Affiliated Managers Group Inc. (AMG). While Virtus Investment Partners and Waddell & Reed carry the same Zacks Rank as Artisan Partners, Affiliated Managers holds a Zacks Rank #2 (Buy).

Read the Full Research Report on WDR
Read the Full Research Report on VRTS
Read the Full Research Report on AMG
Read the Full Research Report on APAM


Zacks Investment Research