What happened
Wealth management and financial planning firm Avantax (NASDAQ:AVTA) saw its share price fall 19.9% this week, as of 1:30 p.m. ET on Friday, according to S&P Global Market Intelligence. The stock price had been down as much as 23.8% during the week. It was trading at about $20 per share as of 1:30 p.m. on Friday, down roughly 21% year to date.
It was a mixed bag for the markets this week as the S&P 500 was down 0.4%, the Dow Jones Industrial Average was up 0.6%, and the Nasdaq Composite had fallen 1.8% for the week, as of 1:30 p.m. ET on Friday.
So what
The wealth management and advisory firm, which had been known as Blucora up until earlier this year, is focused on "tax-intelligent" financial planning -- meaning it helps clients plan for their future while minimizing the impact of taxes.
The sell-off of Avantax this week can mostly be attributed to the release of its second-quarter earnings results on Aug. 9. It missed both earnings and revenue estimates in the quarter.
Revenue was up 15% year over year to $187 million, while net income was down 89% to just $3.6 million, or $0.09 per share.
But the numbers are a little skewed because when Avantax rebranded from Blucora in Q1, it also sold off its TaxAct tax accounting software business to become a pure-play, tax-focused wealth manager.
NASDAQ: AVTA
Key Data Points
According to Avantax CEO Chris Walters,
With two quarters behind us as a pure-play wealth management business, we have maintained strong operational performance across several key metrics. We continue to break records in revenue and advisory assets as a percentage of client assets.
The firm ended the quarter with $84 billion in total client assets, about $43 billion of which, or 51%, were advisory assets -- a record high for the company. It added $141 million of newly acquired assets in the quarter and posted net-positive asset flows for the sixth consecutive quarter with approximately $390 million.
Now what
Analysts are bullish on Avantax as it moves through this transition to tax-focused wealth management, as the median price target among the analysts who cover it is $30 per share. That would be about a 47% increase from its current price.
There had been a report from Bloomberg in July that it had explored a potential sale, but the firm declined to comment on the matter. The report said it was a strategic option it was looking into but added it may not end up selling.
Meanwhile, the firm released its full-year 2023 outlook, which called for revenue between $753 million and $756 million, net income between $16 million and $18 million, and diluted net income per share of $0.40 to $0.45 per share.
There is a lot to like about this stock, and it is one investors may want to keep their eye on.
