Canaccord stock (TSE:CF) experienced its most significant decline in over a year, falling by as much as 14%—the steepest intraday drop since May 2023. This sharp decrease came after the company’s earnings missed analyst estimates due to increased costs associated with hiring and technology investments. Despite reporting record revenue from its wealth-management segment, these costs overshadowed the positive results.
For the quarter ending June 30, Canaccord Genuity reported earnings per share of C$0.13 on an adjusted basis, falling short of analysts’ projections of C$0.21. Additionally, the company’s revenue of C$429 million (approximately $312 million) did not meet expectations.
Increased Investment Costs Impact Earnings
Dan Daviau, Chief Executive Officer of Canaccord Genuity, attributed the disappointing results to recent investments in the wealth-management business, including adviser hires and increased expenses related to client interest and technology. Daviau noted that these investments, which include compliance technology and marketing, contributed to the lower-than-expected earnings. However, he also mentioned that many of these costs are one-time expenses that are unlikely to recur in future quarters.
Future Focus and Strategic Acquisitions
Looking ahead, Canaccord aims to expand its wealth-management segment through organic growth, including attracting new clients and recruiting in the wealth space. The company has invested approximately $600 million in acquiring wealth-management firms, primarily in Australia and the UK, including the purchase of Cantab Asset Management in May.
Daviau also indicated that Canaccord is open to further acquisitions, particularly in Canada, where the market is more concentrated. The company’s combined global wealth-management business achieved quarterly revenue of C$215.9 million, a 13% increase from the previous year. Revenue from capital markets rose by over 41% to C$205.6 million, driven by higher investment banking and advisory fee revenue.
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