Analyst Note| Rajiv Bhatia, CFA |
Shares of narrow-moat-rated SEI Investments have been sideways in recent months, and we believe the risk-reward profile skews favorably toward investors. While SEI certainly faces some headwinds and its sales trends can be choppy, we believe there is value in the firm’s shares, which we value at $71 per share based on our long-term focused, discounted cash flow model. As an analytical exercise, we believe that a sum-of-the-parts analysis values the company at $72, which also suggests the stock is undervalued. While we don’t believe SEI is particularly likely to be acquired, we do believe that if its valuation continues to be cheap, it could become interesting to a peer such as SS&C Technologies or a custody bank.