Evercore Earnings: Uptrend in Revenue Should Persist; Operating Margins Haven’t Recovered Yet

Evercore’s revenue continues to recover from the 2023 cyclical low, but operating margins remain far from previous highs. The company reported net income to common shareholders of $78 million, or $1.86 per diluted share, on $734 million of net revenue in the third quarter. Net revenue increased 29% from a relatively weak quarter the previous year and was 7% higher sequentially. The $734 million is also 11% lower than the 2021 quarterly average, even though the number of senior managing directors in the company’s investment banking business, about 145, is significantly higher than the 114 the company had in 2021. We don’t anticipate making a material change to our $215 fair value estimate for narrow-moat-rated Evercore and assess shares are overvalued after the runup in the stock’s price since the end of June.