Jefferies Adjusts Estimates And PT On Eaton Vance (EV)

Jefferies & Company is out with a report, where it maintains its “hold” rating on shares of Eaton Vance EV; it also has lowered its target price to $31.00 from $32.00 on the stock. Eaton Vance is a traditional asset manager focusing on equity, fixed income and bank loan securities. After normalizing the tax rate, EV reported F3Q10 EPS of $0.35, which was $0.04 below analyst estimates. EV also announced total revenues of ~ $273M, missing Jefferies estimates by $10M. Following these results, the analysts at Jefferies reduced their FY10 EPS estimate by $0.07 to $1.40 and their FY11 EPS estimate by $0.03 to $1.82. Analysts noted that gross flows are on pace for their highest fiscal year total ever, as fixed income and SMA funds led the way. The analysts at Jefferies added, “With the asset mix shifting towards a larger percentage of lower fee products (i.e., Fixed Income and SMAs), we anticipate revenue yield will be flat or marginally lower over the next few quarters. Also not helping is the relatively slow pace of activity in the closed-end fund market.” Analysts noted that EV plans on launching a new global macro fund, as the existing global macro fund is close to reaching its capacity. The Global Macro Absolute Return fund has grown rapidly from $387M in net assets to $5.6B in net assets in just nine months. The new fund is expected to launch sometime this quarter and will be putting less emphasis on emerging markets as they target higher returns.