On Jun 21, we issued an updated research report on Lazard Ltd. LAZ. The company is well poised to benefit from its inorganic growth strategies, diversified assets under management (AUM) mix and improving economic backdrop.
Though heavy reliance on Financial Advisory revenues remains a concern, the company’s efforts to keep costs under control are likely to support bottom-line expansion.
Notably, the company was able to impress analysts regarding its earnings growth potential, as reflected in 1.1% upward estimate revision of the Zacks Consensus Estimate for current-year earnings over the past 60 days.The stock currently carries a Zacks Rank #2 (Buy).
The company’s shares have gained 4.9% over the past six months compared with the industry’s growth of 25.8%.
Lazard’s revenue growth story seems impressive as it witnessed a CAGR of 4.6% over the last five-year period (2014-2018). The company will continue to benefit from strong talent base in the Financial Advisory segment and diversified AUM mix in the Asset Management segment. Also, its inorganic growth strategies will support top-line growth.
Further, the company’s cost saving efforts are encouraging. In 2012, Lazard had announced target ranges for compensation and non-compensation expenses of 55% to 59% and 16% to 20%, respectively, which the company has been achieving consistently. Such achievements, directed toward improving profitability with minimal impact on revenues, will likely boost its long-term growth opportunities.
Moreover, Lazard’s investment strategies in global, local and emerging markets in both equities and fixed income have boosted its AUM. Though AUM decreased 14% year over year in 2018, it witnessed a CAGR of 15.7% over 2015-2017. The increasing trend is expected to continue in the upcoming quarters, with anticipated improvement in the market.
However, increased dependence on Financial Advisory revenues (nearly 52% of total revenues) could adversely impact the company’s financials in the near term. This is because advisory fees are usually paid upon the successful completion of a transaction.
Other Stocks to Consider
Franklin Resources’ BEN Zacks Consensus Estimate for current-year earnings has been revised 4% upward over the past 60 days. Over the past six months, the company’s share price has gained 23.3%. Currently, it sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Legg Mason’s LM current-year earnings have witnessed upward estimate revision of 5.5% in the past 60 days. Additionally, the stock has jumped 57.7% over the past six months. It currently sports a Zacks Rank of 1.
Ameriprise Financial AMP has witnessed slight upward estimate revision in current-year earnings over the past 60 days. Also, in six months’ time, the company’s shares have risen 50.4%. It carries a Zacks Rank of 2, at present.
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Lazard Ltd (LAZ) : Free Stock Analysis Report
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