Lazard’s Earnings May Be Pressured, but Management Sees Opportunity for Accretive Share Repurchases

Pressure on Lazard’s earnings is likely to increase, but management is taking advantage of overly negative sentiment by repurchasing shares at value-accretive prices. Lazard reported net income to common shareholders of $95.5 million, or $0.92 per diluted share on $640 million of net revenue. Net revenue declined 29% from the previous year and 8% sequentially. For the first half of 2022, revenue on an adjusted basis only decreased 6% from the previous year, as financial advisory revenue has held up as the company works through its deal backlog from the second half of 2021. We expect to modestly decrease our fair value estimate for narrow-moat Lazard but believe our opinion will continue to be that shares are undervalued.