WisdomTree (WETF) Growth Struggles Increase Takeover Probability - Jefferies

Jefferies analyst Surinder Thind sees an increasing chance WisdomTree Investments (NASDAQ: WETF) gets acquired as growth headwinds persists.

"WETF's currency hedged flagship funds DXJ and HEDJ continue to outflow at an elevated pace as global central bank policies remain unfavorable," Thinkd notes. "An analysis of the ETF industry suggests it is not possible to predict the level of AUM these funds will bottom out at. While this places pressure on earnings, we see downside risk to shares as somewhat more modest. Continued negative growth simply increases the likelihood of the company becoming an acquisition target."

On who would be interested in WisdomTree, the analyst said "everyone" and its just a matter of price.

"We are not suggesting the buy-out of WETF is imminent or there are talks but the possibilities are intriguing," the analyst said. "Domestically, we believe WETF would be most valuable in the hands of BEN or TROW. BEN's growth challenges are well known and putting WETF products through its distribution network could produce strong synergies. TROW is in the early stages of developing an ETF strategy. Acquiring WETF would solve that problem and potentially provide a compelling active + passive offering for the advisor community."

The firm maintained a Buy rating and price target of $13.00 on WETF.

For an analyst ratings summary and ratings history on WisdomTree Investments click here. For more ratings news on WisdomTree Investments click here.

Shares of WisdomTree Investments closed at $10.30 yesterday.

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