UPDATE: Citigroup Downgrades Affiliated Managers Group to Neutral, Raises PT

In a report published Wednesday, Citigroup downgraded its rating on Affiliated Managers Group AMG from Buy to Neutral, but raised its price target from $135.00 to $155.00. Citigroup noted, “AMG now trades at a ~5% relative sector premium on a P/E basis, a structural rise versus a ~15% historical discount (since 2000) and deep cyclical lows of 40% to 60% discounts. On an EV/EBITDA basis, AMG now trades at ~15x, up from ~11x over last five years, or 160% relative sector premium versus ~130% recently. We believe the structural revaluation is warranted owing to more consistent flow dynamics and strategic model differentiation, but significant incremental multiple expansion may prove more difficult (our target assumes incremental expansion). In turn, we believe investors need to discount either sharply higher NAVs and/or significant deal activity to commit fresh money now. We like the fundamentals, just less so the stock price.” Affiliated Managers Group closed on Tuesday at $146.50.