Lazard Reports Surprisingly Strong Earnings; Shares Undervalued

Lazard has bucked the negative trend of investment banking firms year to date and booked surprisingly strong earnings. The company reported net income to common shareholders of $106 million, or $1.06 per diluted share, on $727 million of net revenue. Adjusted revenue and earnings per share were 11.9% and 30.4% higher than the FactSet consensus estimates, respectively. That said, the company can't sidestep overall industry trends forever and while results should deteriorate we don't anticipate making a material change to our $51 per share fair value estimate for this narrow-moat-rated firm. We assess the shares as being undervalued.