Why Citigroup Downgraded WisdomTree (WETF)

NEW YORK (TheStreet) -- A downgrade from Citigroup Wednesday sent WisdomTree Investments (WETF) lower over the trading session.

By late afternoon, shares had tumbled 5.3% to $13.45.

Trading volume of 8.3 million was nearly triple its three-month daily average.

The investment firm downgraded WisdomTree to "sell" from "neutral" and cut its target price to $11 from $14.

Analyst William Katz wrote in the report, "Four reasons fuel our shift in thinking. First, the flow story is becoming less differentiated, in our view. Second, the incremental margin opportunity also seems less unique. Third, we believe consensus EPS/flow expectations are at risk. Fourth, we see further P/E multiple contraction as points of differentiation deteriorate -- and recent growth initiatives take time to play out."

The firm has lowered its earnings estimates as a result. Citigroup anticipates net income of 49 cents a share in fiscal 2014 and 62 cents a share in fiscal 2015.

Analysts surveyed by Thomson Reuters anticipate net income of 54 cents a share in fiscal 2014 and 71 cents a share in fiscal 2015.

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TheStreet Ratings team rates WISDOMTREE INVESTMENTS INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate WISDOMTREE INVESTMENTS INC (WETF) a BUY. 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, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

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