Balanced View on Victory Capital: Ambitious Growth Strategy Offset by M&A Execution Risks and Competitive Pressures Justifies Hold Rating

J.P. Morgan analyst Michael Cho has maintained their neutral stance on VCTR stock, giving a Hold rating on January 15.

Michael Cho has given his Hold rating due to a combination of factors related to both Victory Capital’s growth prospects and its current execution profile. He recognizes that management has an ambitious strategy to scale assets under management to $1 trillion, leveraging both organic initiatives and a disciplined acquisition-driven model, particularly within traditional asset management. The firm is making progress integrating the Pioneer acquisition, realizing cost synergies and maintaining strong EBITDA margins, and is well-positioned to expand its product lineup, notably in fixed income and ETFs, aided by broad distribution partnerships. At the same time, Victory’s limited current presence in private markets and the inherent execution and integration risks associated with future M&A temper the near-term risk/reward.
Michael Cho also factors in the evolving competitive landscape, where large, full-service managers and highly specialized boutiques are gaining share, leaving mid-sized firms like Victory needing a clear and differentiated strategy to sustain growth. While he views Victory’s measured capital allocation, growing ETF franchise, and expanding distribution as positives, he remains cautious given the choppy long-term net flows, particularly in U.S. equities, and the uncertainty around the timing and impact of future deals. As a result, despite acknowledging solid strategic positioning and potential for further value creation, he sees the current stock valuation as appropriately reflecting these opportunities and risks, supporting a Hold rather than a more aggressive rating.

In another report released on January 15, Barclays also maintained a Hold rating on the stock with a $68.00 price target.