Shares of Legg Mason (LM) are off 77 cents, or 2.3%%, at $33.49, after the company’s annual investor day yesterday failed to impress investors. (Slides from the presentation are here.)
But Citigroup analyst William Katz found reason to upgrade the shares today to “Buy” from “Hold,” with a $44 price target, up from $35, writing that the firm’s pace of redemptions is slowing, its ability to hand off responsibility to affiliates is manageable, and that assets under management is heading in the right direction, with $2 billion in inflows to equity funds and $2 billion in outflows from bond funds, which is less bad, if you will.
Katz raised his esimtate for this year’s non-GAAP EPS to $2.96 from $2.78, and to $3.68 for next year from $3.39.
Further, Legg’s “Cash machine” is working well, with the prospect of $500 million in free cash flow per share by 2012.
Note that my colleague Avi Salzman wrote positively about Legg in Tuesday’s Barron’s Take.
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