Shares of advisor technology provider Envestnet soared Thursday, following reports that it is exploring a potential sale of data aggregator Yodlee. Envestnet has enlisted the help of an advisor to gauge interest from potential buyers, according to a Bloomberg news report.
Envestnet, whose share price has struggled this year, declined to comment on the rumors or market speculation surrounding the potential sale, citing company policy.
In 2015, Envestnet acquired Yodlee for around $600 million. Yodlee offers a suite of technology and software services to wealth management companies and financial advisors, including financial planning tools, risk assessment capabilities, asset allocation models, research resources, and account monitoring solutions.
Despite being under Envestnet's ownership for the past eight years, analyst Michael Cho from J.P. Morgan believes that separating Yodlee from its parent company would not pose significant challenges. In fact, Cho suggests that Envestnet could attract potential buyers for Yodlee's business, potentially resulting in a deal where Envestnet continues to have access to Yodlee's data.
"We estimate that a reasonable earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple of approximately 15x could generate proceeds of around $300-400 million for Envestnet," Cho stated in a research note dated December 14th. He rates the stock as neutral.
Envestnet's shares were trading at $47.81 at midday, marking a 4.0% increase for the session. However, this remains well below the stock's 52-week high of $69.22. Year-to-date, the stock has declined by 23%.
If the sale of Yodlee proceeds, it would come amid a challenging year for Envestnet. The company implemented staff layoffs in September as part of cost-cutting measures and recently revised its revenue guidance for the year following its third-quarter earnings report.