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Evercore: Increasing Our Fair Value Estimate To $171 From $166; Shares Modestly Undervalued

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Securities In This Article
Evercore Inc Class A
(EVR)

We are increasing our fair value estimate for narrow-moat Evercore EVR to $171 per share from $166. This corresponds to a forward price/adjusted earnings multiple of around 11.5 times and a forward enterprise value/EBITDA multiple of about 11 times. Of the net $5 increase in our fair value estimate, most of it was from earnings since our previous valuation update with additional adjustments for working capital, managing director productivity, and managing director headcount.

We continue to believe that near-term earnings will likely be pressured by the increase in senior managing director hiring in 2022 and so far in 2023 as the senior managing directors will increase compensation, but won’t add much to revenue in the near term. However, with global interest rates likely peaking and increasing market expectations of a relatively mild economic slowdown in the United States, in contrast to a recession, Evercore’s revenue and earnings should experience a more sustained recovery in the first half of 2024.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Michael Wong

Sector Director
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Michael Wong, CFA, CPA, is director of equity research, financial services, North America, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Michael previously served as chair of the valuation committee. Before assuming his current role in 2017, he was a senior equity analyst, covering investment banks and brokerages. Before joining Morningstar in 2008, he worked in corporate and public accounting.

Wong holds a bachelor’s degree in business administration, with concentrations in accounting, corporate finance, and financial services from San Francisco State University, where he graduated summa cum laude. He also holds the Chartered Financial Analyst® designation and is a Certified Public Accountant. Wong has also passed the Certified Financial Manager (CFM) and Certified Management Accountant (CMA) exams.

Wong won the “Technology Thought Leadership” award at the 2016 WealthManagement.com Industry Awards for his report, The Financial Services Observer: The U.S. Department of Labor’s Fiduciary Rule for Advisors Could Reshape the Financial Sector. In 2011, he ranked second in the Investment Services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. Wong was awarded the summer 2005 Johnson & Johnson Institute of Management Accountants CFM Gold Medal.

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