The GQG Partners Inc (ASX: GQG) share price has been a disappointing performer since landing on the ASX boards following the completion of its IPO in October.
For example, although the fund manager's shares rose 2% to $1.86 on Thursday, it is still down 7% from its listing price of $2.00.
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Is the GQG share price weakness a buying opportunity?
The team at Goldman Sachs believe the weakness in the GQG share price since its listing is a buying opportunity.
According to a note, the broker has initiated coverage on the fund manager with a buy rating and $2.45 price target.
Based on the current GQG share price, this implies potential upside of 32% over the next 12 months.
What did Goldman say?
Goldman advised that it is bullish on the GQG share price for a number of reasons. This includes its positive outlook and attractive valuation.
The broker commented: "Our investment case is underpinned by: Solid investment performance, lowest quartile fee offering among global peers, and strong distribution. Coupled with a scalable business model, this has contributed to robust financial outcomes."
"We see strong alignment between shareholders and staff, and note that i) GQG's co-founders have the majority of their net wealth invested in GQG and its investment strategies, and ii) over time, the company aims for every one of its employees to be both an equity holder in GQG and have exposure to at least one of GQG's investment strategies," it added.
As for its valuation, Goldman sees scope for its shares to rerate to higher multiples.
It explained: "To reflect the weaker organic growth recently, we consider trough levels of NTM EV/EBITDA multiples of its comparable stocks (c.10.4x). If GQG's one-year performance improves and it is therefore able to maintain its very strong organic growth, we think it could trade up towards the average of NTM EV/EBITDA multiples (13.1x). Applying the midpoint of the above multiples (ie. 11.8x) to our 12m fwd EBITDA forecast and using our GS AUDUSD forecast (0.72), we set our 12m TP at A$2.45 and initiate at Buy."
