Evercore Earnings: Investments in Senior Managing Director Headcount To Weigh on Earnings

Evercore is positioning itself to benefit when the mergers and acquisitions cycle recovers, but near-term earnings will be weighed down by the related investment in headcount. The company reported net income to common shareholders of $37 million, or $0.95 per diluted share, on $499 million of net revenue. Net revenue decreased 21% from the previous year and 13% from the previous quarter and was at the lowest level since the third quarter of 2020. While people are becoming more optimistic on the economy, mergers are transformational events for companies, and merger announcements and merger closings could take a couple more quarters to ramp up. We don’t anticipate making a material change to our $166 fair value estimate for narrow-moat-rated Evercore and assess shares are modestly undervalued.