Barclays upgrades CI Financial to 'overweight' on wealth management growth

Barclays analyst John Aiken upgraded Toronto-based CI Financial Corp. to "overweight" from "underweight," writing that the company has successfully pivoted to wealth management and entered the U.S. registered investment adviser market.

"CI's valuation is not reflecting the growth and future cash flow impact of its aggressive distribution build out, providing longer-term investors with an opportunity to buy an efficient operator with significant growth potential at a depressed valuation," Aiken wrote.

The company has done 14 RIA acquisitions in the U.S. in line with CEO Kurt MacAlpine's new strategy of focusing on wealth management and modernizing CI's asset management business, Aiken wrote.

"In a very short period of time, CI has become a meaningful player in the U.S. RIA market and is expected to continue participating in the consolidation of this attractive and fast growing industry," he wrote.

The EPS estimate for 2020 was increased to C$2.36 from C$2.34, and for 2021, to C$2.70 from C$2.46. The price target was set at C$21.00.