WisdomTree Provides Little Fruit For Investors; UBS Says Sell

UBS thinks WisdomTree Investments, Inc. (NASDAQ: WETF) has nothing to offer except ETFs, although it is not a proxy to the wider ETF market. Therefore, the firm initiated the stock at a Sell and attached a price objective of $7.00, implying downside risks of more than 15 percent from the current levels.

Analyst Brennan Hawken cited a number of risks to his rating, though he does not subscribe to it. For instance, there has been talk of a possible M&A target, which could ignite a fresh rise in the stock price. However, a significant risk could come from a beta rally in Europe.

In a research note, the brokerage said, “In our view the narrow/niche focus of WETF's products and the scale disadvantage of WETF versus its larger competitors are significant obstacles to a rapid recovery in their organic growth outlook. As a result, we do not believe WETF shares should trade at a 300 percent premium to the traditional AMs when the average over the past few years has been a 190 percent premium.”

Although UBS thinks fiduciary rule is favorable for passive investing, the firm believes it would be less attractive in the case of self-indexed products. The brokerage sees limited momentum with institutional clients pointing out the expectations that asset allocation decisions might be centralized.

At last check, the stock had fallen 3.35 percent to $8.37.