Medley's Growth Initiatives Are Already Priced Into The Stock

Ladenburg Thalmann downgraded Medley Management Inc (NYSE: MDLY) to Neutral from Buy on valuation. However, the brokerage raised its price target by $1.50 to $7.50, implying a potential return of 4 percent.

Medley reported Q2 core EPS of $0.14, which missed Ladenburg forecast/consensus of $0.16 on higher compensation and G&A expenses. Higher fee income, driven by robust leveraged loan market, mitigated declines in private funds and SMAs.

The company total AUM (committed funds) at the end of second quarter remained at $5.0 billion versus $3.2 billion invested.

"MDLY has been a strong performer since mid-1Q16 as the leveraged loan market has rebounded within a stronger credit environment," analyst Mickey Schleien wrote in a note.

However, the brokerage cut its 2016 core EPS forecast to $0.59 from $0.63 to reflect this quarter's miss, reduced FAUM growth assumptions, and higher forecast expenses. It also set a 2017 core EPS forecast of $0.69 (consensus is $0.72).

At time of writing, shares of Medley were down 0.50 percent to $7.94.