Analyst Note| Michael Wong, CFA, CPA |
Evercore reported an exceptionally strong finish to 2020, and its business model may hold up better in 2021 than other investment banks. The company reported record quarterly net income to common shareholders of $220 million, or $5.02 per diluted share, on record quarterly net revenue of $927 million in the fourth quarter. Quarterly net revenue increased 40% from the previous year, while full-year net revenue increased 13%. We were uncertain as to fourth-quarter revenue, wondering if the lack of announced mergers and acquisitions earlier in the year would lead to few deal closures and low revenue in the back half of the year. While third-quarter advisory revenue of $271 million was the lowest advisory revenue quarter in years, fourth-quarter advisory revenue of $790 million was a new record. We don’t anticipate making a significant change to our $98 fair value estimate for narrow-moat Evercore.