Analyst Note
| Rajiv Bhatia, CFA |Narrow-moat-rated Envestnet reported solid fourth-quarter results and 2021 revenue outlook, but we suspect investment spending will disappoint investors in the near term. Revenue outlook for 2021 of $1.105 billion-$1.120 billion was in line with the FactSet consensus of $1.111 billion, but as the company ramps up investment spending, adjusted EBITDA margins are expected to decline to 20.7% from the 24.3% in 2020 and the 21.4% in 2019. As a result, Envestnet’s 2021 adjusted EPS outlook of $1.95 to $2.08 missed the consensus estimate of $2.71. We are lowering our fair value estimate on Envestnet's shares to $65 from $74 to account for higher expenses in our model.