NEW YORK (TheStreet) -- Shares of WisdomTree Investments(WETF) - Get Report are plummeting by 7.97% to $12.24 on heavy trading volume late Monday afternoon, as Goldman Sachs downgraded the stock to "sell" from "neutral" and lowered its price target to $14.50 from $22.
Goldman Sachs said growing competition in the quantitative-driven exchange-traded funds (ETF) space, which the company specializes in, and the impact of flat equity and bond markets on organic growth are reasons for the downgrade, Reuters reports.
The firm believes these challenges should pressure the company's long-term growth.
The company's stock is on course for its eighth consecutive day of decreases today, which would mark the longest declines in its 14-year history, Reuters noted.
Additionally, Jefferies lowered its price target on WisdomTree Investments to $19 from $24 on Monday morning, but maintained its "buy" rating on the stock.
"Significant volatility around flows has created uncertainty around the level of compensation accrual, which will be the primary debate for the quarter," the firm said in an analyst note.
About 5.99 million of WisdomTree Investments shares were traded by this afternoon, well above its average of 2.95 million shares per day.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WISDOMTREE INVESTMENTS INC as a Buy with a ratings score of B. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WETF's very impressive revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues leaped by 71.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WISDOMTREE INVESTMENTS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WISDOMTREE INVESTMENTS INC increased its bottom line by earning $0.45 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.58 versus $0.45).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 119.2% when compared to the same quarter one year prior, rising from $10.62 million to $23.29 million.
- 49.48% is the gross profit margin for WISDOMTREE INVESTMENTS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.83% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 85.97% to $44.62 million when compared to the same quarter last year. Despite an increase in cash flow of 85.97%, WISDOMTREE INVESTMENTS INC is still growing at a significantly lower rate than the industry average of 279.75%.
- You can view the full analysis from the report here: WETF