Increasing Our FVE for Lazard to $52; Management Believes Shares Are Undervalued, as Do We

Lazard has business exposures that add more uncertainty to its near-term outlook, but we believe this is already factored into its share price. Approximately 55% of Lazard’s net revenue is from acquisition and restructuring advisory with the remaining 45% coming from institutional asset management. Similar to many of its financial advisory peers, Lazard booked record revenue in 2021, and financial advisory revenue should normalize lower over the next couple of years before resuming a growth trend. Given its relatively high exposure to EMEA and Asia (about 40% of net revenue), investors in Lazard also have to pay more attention to developments in Europe and the potential for a prolonged European recession and a strengthening U.S. dollar. The company’s asset management business that specializes in global investing also gives it more exposure to international conditions and equity market prices than many of its financial advisory peers.