Analyst Note| Michael Wong, CFA, CPA |
Lazard’s revenue and earnings growth arguably underperformed investment banking peers, but it’s not as bad as it seems, and the share price is trading at a relative bargain to many other financial sector stocks. Lazard reported net income of $87.3 million, or $0.75 per diluted share, on $660 million of net revenue. Operating net revenue increased 15% from the previous year and decreased 24% sequentially with approximately 8% year-over-year growth in advisory revenue and 22% growth in asset management revenue. The 8% growth in advisory revenue compares with many other investment banks that had advisory revenue growth upwards of 30%. We don’t anticipate making a material change to our $47 fair value estimate for narrow-moat Lazard. Shares are currently trading at a high-single-digit percentage discount to our fair value estimate, which is a relative bargain compared with many financial stocks that we cover that are trading above their fair value estimates.