Shares of WisdomTree (NasdaqGS: WETF), the only publicly traded pure play issuer of exchange traded funds, are trading slightly lower Monday after Keefe, Bruyette & Woods analyst Robert Lee downgraded the stock to market perform from outperform.
WisdomTree is off just four cents, or 0.18%, at this writing to $21.93. Lee argues “that the risk/reward profile of the stock is less favorable, given the current share price,” reports Johanna Bennett for Barron’s.
Even with the downgrade, Lee maintains his $25 price target on the stock. That is nearly 14% above where the stock currently trades. Citigroup has a $25.50 price target on WisdomTree. That bank reiterated its buy rating on the stock today.
“No change to our $25.50 12-month price target though we believe the shares could prove choppy ST in light of mixed USD dynamics. However, stepping back, we see WETF as a key beneficiary of the rising global ETF opportunity,” said Citigroup analyst William Katz in a note posted by Barron’s.
Earlier this month, WisdomTree joined the S&P MidCap 400 Index last week, making the stock eligible for inclusion in ETFs such as the iShares Core S&P Mid-Cap ETF (NYSEArca: IJH) and the SPDR S&P MidCap 400 ETF (NYSEArca: MDY), which both track the S&P MidCap 400 Index. [WisdomTree Joins Major Mid-Cap Index]
As of June 19, WisdomTree had $62.1 billion in assets under management, making the New York-based firm the fifth-largest U.S. ETF issuer. While currency hedged ETFs are a hot theme, and likely to remain so as the dollar continues strengthening against other developed market currencies, other ETFs are also helping WisdomTree attract assets.
The company offers seven U.S-focused dividend ETFs and nearly 20 international dividend funds, which offer exposure to developed, emerging and frontier markets. An extensive dividend lineup gives WisdomTree exposure to the fund segment that has been one of the primary drivers of asset growth in smart beta ETFs in recent years.
Of the top 10 ETFs this year on an asset gathering basis, two are WisdomTree funds – the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) and the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ). [Pros Missing out on Japan ETF Strength]
HEDJ has pulled in almost $13.9 billion in assets this year, more than any other ETF, while DXJ has seen 2015 inflows of $4.2 billion. That is good for the sixth-best total among all ETFs. As of June 19, DXJ and HEDJ and $18.1 billion and $19.9 billion in assets under management, respectively.
Shares of WisdomTree are up 86% over the past year.
WisdomTree
Chart Courtesy: StockCharts