EMEA Exposure Is Manageable for Some U.S.-Listed Investment Banks

Given recent events, we decided to look at the exposure of some U.S.-listed investment banks to Europe. Potential causes of near-term turbulence include recession risk, higher commodity prices and inflation, central bank reactions, economic uncertainty weighing on investment banking deals, lower asset prices decreasing asset management revenue, and a greater dispersion in trading revenue. While we’ll be making some adjustments, we don’t expect to make material changes in our fair value estimates or economic moat ratings, as our long-term outlook remains largely unchanged. Lazard, Evercore, and Goldman Sachs are currently trading at material discounts to our fair value estimates.