Various stock researchers initiated coverage on AssetMark Financial Holdings Inc., which closed its IPO in July.
Goldman Sachs analysts Alexander Blostein, Ryan Bailey, Sheriq Sumar and Daniel Jacoby initiated coverage with a "buy" rating and a 12-month price target of $31. They wrote that the company is benefiting from secular shifts within wealth management toward fee-based independent advisers, an increasing market share within the independent broker/dealer channel and a bigger wallet share with existing financial advisers in its platform. The analysts also wrote that the stock is a "pure-play" way for investors to gain access to secular shifts to independent advice channels from wirehouses and a shift to advisory from commissions.
Raymond James analysts Patrick O'Shaughnessy, David Farnum and Michael Vinci initiated coverage with an "outperform" rating and a price target of $31. The analysts wrote that AssetMark will continue to benefit from secular tailwinds driving one of the fastest-growing segments within the financial services industry, given that it provides outsourced adviser investment and technology solutions. They believe more financial advisers will move to independent and fee-based models and that the company's retooling of its customer service and sales organization has resulted in growth in net asset flows since 2017, which they expect the company to sustain, providing a foundation for strong revenue and EPS growth.
William Blair analysts Chris Shutler and Andrew Nicholas initiated coverage with a "market perform" rating, saying they believe there is a need for more outsourcing in investment management and for more efficiency in advisers' practices. However, the analysts wrote that it is hard for them to look past the stock's high valuation considering potential interest rate changes, a tougher macroeconomic environment for equity markets and interest rates, and that they have already modeled net flows "to modestly accelerate." Despite this, they wrote that there are still figures for which they have conservative estimates, such as slowing expense growth from 2019 to 2021, and that a potential upside to the stock price is inorganic growth, as they believe the company will likely make "tuck-in" turnkey asset management program acquisitions.