Eaton Vance (NYSE:EV) Equity Products Remain Under Pressure

With the bond market under extreme pressure and equities of Eaton Vance (NYSE:EV) underperforming, Ticonderoga sees the company as overvalued at current levels.

Ticonderoga said, "EV Equity Franchise Has Its Work Cut Out. EV's largest equity products continue to face performance challenges. For the one-year period, the Large Cap Value fund and the Tax-Managed Growth fund were in the 91st and 75th percentile, respectively. Combined, the funds represent an estimated 42% of equity mutual fund assets (Large Cap Value alone accounted for 11% of total revenue in F2010, while the Tax Managed Growth portfolio was likely a touch below 10% for the year). We continue to see a steady rate of asset decay but nothing overly alarming yet. However, we are growing a bit more concerned considering the length of the relative gap. We estimate that EV's total equity fund assets on a weighted basis were in the 82nd and 65th percentile over the one- and three-year periods, respectively.

"More Risk in Name at Current Levels. While we are not calling for a doomsday bond scenario, general pressure on US bonds poses some pressure to the EV flow story. Combined with greater risk to the equity franchise, we continue to believe shares are overvalued."

Ticonderoga maintains a "Sell" rating on on Eaton Vance, which closed Tuesday at $30.17, down $0.70, or 2.27 percent. They have a price target of $25 on Eaton.