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Investing.com — Shares of Virtus Investment Partners Inc (NASDAQ:VRTS) tumbled 5% on Friday after Morgan Stanley downgraded the stock to underweight from overweight, slashing the price target to $240 from $393.
Analyst Michael Cyprys said in a research note that he sees “deteriorating fund performance that could further weigh on the flows outlook.”
As a result, Morgan Stanley has cut its forecast for Vitrus’ earnings before interest, taxes, depreciation and amortization by 25% and reduced the price target by 39%.
“We’re now looking for outflows of -4% in 2022 and -1.8% in 2023, vs. our prior expectation of inflows of +1% and +2.7%, respectively,” said Cyprys.
Additionally, the analyst explained that retail separate account inflows have slowed.
“VRTS’s exposure to equities (62% of AUM) and skew to growth stocks within fund holdings have weighed on client appetite and fund performance.”