Cohen & Steers Price Target Lowered to $66 by BofA Amid Q2 Softness

BofA lowered Cohen & Steers' price target to $66 from $67 and maintains an Underperform rating after the company reported negative Q2 results, including outflows in preferred securities.

Cohen & Steers Inc. reported its financial results for the second quarter of 2025, revealing earnings per share (EPS) of $0.73, which fell short of the forecasted $0.76. Despite the EPS miss, the company exceeded revenue expectations, reporting $136.13 million against a forecast of $133.19 million. The company’s stock experienced a slight decline of 0.34% in premarket trading, closing at $75.30, amid mixed investor sentiment. Key Takeaways Cohen & Steers’ Q2 EPS of $0.73 missed the forecast by 3.95%. Revenue surpassed expectations, reaching $136.13 million. The company’s stock fell 0.34% in premarket trading. New product launches in ETFs contributed to net inflows. Operating margin declined slightly to 33.6%. Company Performance Cohen & Steers demonstrated resilience in Q2 2025 with a modest revenue increase, outperforming its forecast despite an EPS miss. The company launched new active ETFs, which attracted $54 million in net inflows, contributing to a total ETF AUM of $133 million. The firm also reported an increase in assets under management (AUM), ending the quarter at $88.9 billion, up from $87.6 billion previously. Financial Highlights Revenue: $136.13 million, up 1.1% from the previous quarter. Earnings per share: $0.73, down from $0.75 in the prior quarter. Operating margin: 33.6%, a slight decline from 34.7%. Assets under management: $88.9 billion, up from $87.6 billion. Liquidity: $323 million, an increase from $295 million. Earnings vs. Forecast Cohen & Steers reported an EPS of $0.73, missing the forecasted $0.76 by 3.95%. However, the company exceeded its revenue forecast of $133.19 million, achieving $136.13 million, marking a 2.21% surprise. This mixed performance reflects the challenges and opportunities faced by the firm amid evolving market conditions. Market Reaction Following the earnings release, Cohen & Steers’ stock price experienced a minor decline of 0.34% in premarket trading. The stock closed at $75.30, moving away from its 52-week high of $110.67. This movement aligns with broader market trends, as investors weigh the implications of the earnings miss against the revenue beat. Outlook & Guidance Looking ahead, Cohen & Steers maintains a positive outlook with plans to expand its ETF offerings and infrastructure strategies. The company projects an effective tax rate of 25.3% and expects the compensation ratio to remain stable at 40.5%. Future annual G&A changes are anticipated to moderate to mid-single digits. Executive Commentary "We strongly believe that too much is made of the higher for longer story impact on valuations," stated John Jay, President and CIO, emphasizing confidence in the firm’s strategic direction. CEO Joe Harvey added, "We continue to see opportunities for asset owners to add real asset allocations to their portfolios," highlighting growth areas in real assets. Risks and Challenges Market volatility and economic uncertainty may impact investment performance. Competitive pressures in the asset management industry could affect growth. Regulatory changes and compliance costs pose potential risks. Currency fluctuations could influence international operations. Maintaining operational efficiency amid expansion plans is critical. Q&A During the earnings call, analysts inquired about the progress in the wealth management channel, particularly the RIA segment. Executives noted active ETFs are attracting new investors, and global infrastructure strategies are experiencing some institutional rebalancing. Opportunities in real asset allocations were also discussed, reinforcing the firm’s strategic focus. Full transcript - Cohen & Steers Inc (CNS) Q2 2025: Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cohen and Steer Second Quarter twenty twenty five Earnings Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Friday, 07/18/2025. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen and Steers. Please go ahead. Brian Heller, Senior Vice President and Deputy General Counsel, Cohen and Steers: Thank you, and welcome to the Cohen and Steers second quarter twenty twenty five earnings conference call. Joining me are Joe Harvey, our Chief Executive Officer Raja Dakhoury, our Chief Financial Officer and John Jay, our President and Chief Investment Officer. I want to remind you that some of our comments and answers to your questions may include forward looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying second quarter earnings release and presentation, our most recent annual report on Form 10 ks and our other SEC filings. We assume no duty to update any forward looking statements. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy securities of any fund or other investment vehicle. Our presentation also contains non GAAP financial measures referred to as as adjusted financial measures that we believe are meaningful in evaluating our performance. These non GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at www.cohenandsteers.com. With that, I’ll turn the call over to Raja. Raja Dakhoury, Chief Financial Officer, Cohen & Steers: Thank you, Brian, and good morning, everyone. My remarks today will focus on our as adjusted results. A reconciliation of GAAP to as adjusted results can be found in the earnings material. Yesterday, we reported earnings of $0.73 per share compared to $0.75 sequentially. Revenue for Q2 increased 1.1% from the prior quarter to 135,000,000 The change in revenue from the prior quarter was driven by a few items, including higher average AUM and day count. Our effective fee rate was 59 basis points, which was in line with the prior quarter. Our operating margin was 33.6% compared to 34.7 in the prior quarter. As noted, we experienced higher average AUM compared to the prior quarter. In addition, ending AUM increased compared to Q1. Ending AUM was $88,900,000,000 as of Q2 compared to $87,600,000,000 at prior quarter end. Ended period AUM was positively impacted by market appreciation during the quarter. It is worth noting that the market events of April negatively impacted our average AUM during the quarter. However, AUM more than recovered by the end of Q2. Net inflows into our open end funds were offset by institutional net outflows. Our open end funds have experienced positive net flows in the last four consecutive quarters. Joe Harvey will provide additional insights regarding our flows and pipeline. Total expenses during Q2 were 2.9% higher than the prior quarter due to a number of drivers. Compensation and benefits increased during the quarter. The change in comp and benefits was in line with the sequential increase in our revenue. As a result, the compensation ratio for the quarter remained at 40.5%. Distribution and service fees were impacted by higher average AUM in our open end funds. G and A expense levels increased versus the prior quarter. G and A was impacted by travel and other business development activities, including, for example, the launch of our active ETFs. This activity is consistent with our focus on sales and distribution. As a result of our efforts, we generated a meaningful increase in our won but unfunded pipeline as of quarter end. We will detail this later in the call. In addition regarding expenses, we experienced higher levels of talent acquisition costs during the quarter. The primary driver was recruiting for our sales and distribution functions. Regarding taxes, our effective rate was 25.3% for the quarter. Our earnings material presents liquidity at the end of Q2 and prior quarters. Our liquidity totaled $323,000,000 at quarter end, which compares positively to $295,000,000 in the prior quarter. Let me now touch on a few items regarding 2025 guidance. With respect to comp and benefits for 2025, we expect our compensation ratio to remain at 40.5%, in line with our prior guidance. We expect full year G and A to increase in the 7% to 8% range as compared to full year 2024. The change in G and A is primarily driven by talent acquisition costs during 2025 as well as travel and other business development activities. Also impacting G and A are expenses related to our active ETS launch. Other drivers of G and A include infrastructure investments such as our foreign office upgrades. During Q2, we moved into our