Envestnet shares popped -- up 8% today -- after Wall Street filtered out bad news and staked its bet on confidence in a new team
The Berwyn, Pa., firm sugar-coated nothing but ended up with a sweet stock price result as analysts see good outweighing bad.
3 min read- Envestnet's stock surged 8% despite a $183M Yodlee write-down, signaling investor confidence.
- Analysts raised Envestnet's price targets, betting on the new team's execution-focused strategy.
- LPL Financial increased its Envestnet stake, demonstrating confidence from a competitor.
- Sipp's leadership emphasizes execution and a unified Envestnet agenda, improving integration.
Envestnet divulged a $183 million goodwill impairment yesterday and watched its market capitalization rise by $220 million today (Feb. 23) after investors decided they saw more silver lining and less black cloud.
The Berwyn, Pa., firm's share jumped $4.08, or more than 8%, to $52.97 after revealing that its data business and its chief data asset – Yodlee – are in ugly enough shape to be publicly devalued. See: On Bill Crager's last CEO call, Envestnet does bad-news dump -- a big Yodlee-related write-off -- but dangles bright future where Tamarac becomes the mouth of its sales funnel
Thank analysts who stuck their necks out for the company when a raft of bad news, no permanent CEO in sight and a new sensible but hard-to-swallow policy of declining to offer detailed guidance could have sunk the stock.
Envestnet won't project how much revenue to expect more than three months into the future. Most companies look forward up to a year in advance.
Still, Peter Heckmann of D.A. Davidson, Patrick O'Shaughnessy of Raymond James, Daniel Perlin of RBC Capital and Michael Cho JP Morgan all raised their price targets on the stock.
Bill Crager signals comity with Lauren Taylor Wolfe and Envestnet also has a Sipp secret weapon, analyst says
Cho's target of $45 (up from $44) is still well below where the shares trade.
Heckmann is most optimistic with a raised target of $70, up from $66, after asking the bluntest question yesterday" “Is there something fundamentally broken?”
LPL steps up
Envestnet also apparently got a recent vote of confidence from an advisor servicing competitor, LPL Financial.
“LPL Financial LLC grew its position in shares of Envestnet by 8.2% in the 3rd quarter,” writes Marketscreener.
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“LPL Financial LLC now owns 23,309 shares of the business services provider's stock valued at $996,000 after buying an additional 1,769 shares during the last quarter.”
On Bill Crager's last CEO call, Envestnet does bad-news dump -- a big Yodlee-related write-off -- but dangles bright future where Tamarac becomes the mouth of its sales funnel
At least one non-Wall Street analyst saw all of this coming because he saw unsung Tom Sipp lead yesterday's analyst call like he owned it.
Evestnet, or else
In a previous RIABiz article Andrew Besheer of Datos Insights used the strongest language to signal the arrival of Sipp as an Envestnet game changer.
“[Sipp] is an absolute no bullshit, 100% execution-focused guy,” he said.
"[He] has basically made it clear that anyone with a personal agenda, as opposed to an Envestnet agenda had better either shape up, or ship out, and that message has gotten through.
“I get the sense that integration work was either not happening or had become [de-facto] annuities for legacy staffers.
"[But] in conversations with some of the executives sitting one or two down from him … they’re living and breathing execution all of a sudden,” Besheer says.
As if on cue, Crager was asked yesterday about what he looks for in the next CEO.
“It will all be about execution from here,” he said.
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