Cowen (COWN) is a financial services provider located in the United States.
The firm primarily provides trading, research, investment banking, and asset management services. I am bearish on the stock. (See Analysts' Top Stocks on TipRanks)
Share Repurchases, Earnings, and Value
Cowen increased its share-repurchase plan to $50 million in September, an increase of $900,000.
Cowen's decision to repurchase additional shares was made after the company reported its Q2 results. The investment bank's revenue declined by 30.8% year-over-year, and it maintained its quarterly dividend of $0.10.
From an intrinsic point of view, Cowen's diluted EPS has taken a 25% knock over the past quarter, and it's possible that the stock's value could get dragged down with it, considering the close correlation.
Future Outlook
Cowen's business places a significant amount of concentration on trading and asset management.
During the initial pandemic pullback buying spree, Cowen managed to rack up a significant amount of growth in its main segments, with trading commissions growing by 42.2%, and asset management fees growing by 55.9%. Considering the market outlook, it's safe to say that markets are set for another pullback, and Cowen may suffer as a consequence of its net-long asset management portfolio and flatter brokerage volume.
It's largely anticipated that public offerings will cool down after a SPAC and mid-market IPO craze the past two years.
Declining Momentum
As things stand, Cowen is trading below its 50-, 100-, and 200-day moving averages. Financial stocks have found a bit of momentum lately due to Jerome Powell's confirmation that higher interest rates in 2022 are a possibility. Cowen won't benefit from this momentum, as the bulk of its business isn't reliant on loan origination.
The stock's RSI is in the 50s, so there's no reason to say that it's an overbought stock, but investors may well end up selling aggressively after the stock's outperformance last year.
Wall Street's Take
Wall Street is bearish on the stock, and thinks it is a Moderate Sell. A $35 price target provided by James Yaro of Goldman Sachs (NYSE:GS) is the only rating provided within the past three months, and it represents 0.3% upside potential.
Concluding Thoughts
Cowen stock has run its course for now. The stock had a sublime year in 2020 and for much of 2021, but a slowdown in segment growth rates could lead to a pullback.
Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.
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