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Artisan Partners (APAM) Gains From Rising Assets, Costs Increase

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Artisan Partners Asset Management Inc. (APAM - Free Report) is benefiting from its diverse investment strategies across multiple asset classes, which helps it attract buyers’ interest. Also, increasing assets under management (AUM) balance is likely to keep supporting top-line growth.

However, rising costs keep the bottom line under pressure. Further, net outflows in some of the investment strategies, might hurt AUM growth to some extent.

Further, the company’s earnings estimates have been stable for the current year, over the past 30 days. As a result, the stock carries a Zacks Rank #3 (Hold), at present.

The stock has gained 49.8% in the past six months compared with 23.8% growth recorded by the industry.

Artisan Partners has a decent revenue growth history as evident from 3.5% CAGR over the last four years (ended 2019), on account of rising AUM. The company’s diverse product offerings and investment strategies continue to attract investors and are expected to support revenue growth.

As of Sep 30, 2020, the company held total debt worth $199.2 million, relatively stable over the past few quarters. Its debt-capital ratio, currently 0.56, has been witnessing a downtrend. Also, cash and cash equivalents of $230.9 million, as of the same date, have improved. Earnings before interest and tax are 31.3 times the interest expenses, and have witnessed a rising trend. Thus, we believe Artisan Partners’ carries low credit risk and has lesser likelihood of default of interest and debt repayments.

However, operating expenses have been exhibiting an uptrend over the past few quarters. It witnessed a four-year CAGR of 1.9% in 2019, due to an increase in employee compensation and benefits expenses and occupancy costs. With the company intending to make incremental investments in technology, operating expenses are expected to remain elevated.

Also, Artisan Partnershas experienced a volatile trend in net outflows over the past several years. It expects net outflows in the near term in the Non-U.S. Growth, U.S. MidCap Growth, and U.S. Mid-Cap Value strategies. Also, a challenging operating backdrop and several geopolitical concerns might keep investors on the sidelines.

Stocks to Consider

Evercore Inc (EVR - Free Report) has witnessed upward earnings estimate revisions for 2020 in the past 30 days. Moreover, this Zacks #2 Ranked (Buy) stock has gained 80.5% in three months’ time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lazard Ltd (LAZ - Free Report) current-year earnings estimates have moved north in 30 days’ time. Further, the company’s shares have appreciated 30.5% over the past three months. At present, it flaunts a Zacks Rank of 1.

BlackRock, Inc. (BLK - Free Report) has witnessed upward earnings estimate revision for the ongoing year in the past 30 days. This Zacks #2 Ranked stock has gained 28.4% in the past three months.

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