Waddell & Reed Shares Added To Sell List At Citi

Citi’s William R Katz maintained a Sell rating for Waddell & Reed Financial, Inc. (NYSE: WDR), while reducing the price target from $18 to $17. While adding the company to the US Focus Sell List, the analyst said that the recent increase in the company’s shares does not reflect fundamental issues.

Key Reasons For Sell Rating

Analyst William Katz outlined five key reasons for the Sell rating for Waddell & Reed:

• Relative fund performance analysis for flagship funds point to further deep attrition ahead.
• Downbeat February flow update reinforces the outsized share loss theory.
• Expectations of negative EPS consensus revisions.
• Possibility of resurfacing of outsized regulatory risks once Department of Labor fiduciary reforms get released.
• Shares currently trade in-line with peers, despite fundamental issues.

Katz also recommending exchanging Waddell & Reed’s shares with those of Legg Mason Inc (NYSE: LM). He elaborated, “We see several factors favoring LM versus WDR including superior strategic positioning, better flow/AUM outlook, and more effective use of capital, all at a more attractive valuation.”