Analyst Note| Michael Wong, CFA, CPA |
Lazard reported strong results for the fourth quarter, and merger and acquisition activity is continuing its recently positive trajectory. The company reported net income to common shareholders of $190 million, or $1.64 per diluted share, on $878 million of net revenue in the fourth quarter. The $878 million of net revenue was 22% higher than a year ago and 56% higher than the quarterly average for the first nine months of the year. Earlier in 2020, we were wondering if the lack of announced M&A in the first half of the year would lead to few deal closures and low revenue in the back half of the year. However, M&A announcements started to ramp in the third quarter, and both M&A and restructuring advisory look like they booked healthy revenue in the fourth quarter. Assets under management ended the year at a record $258 billion. While Lazard booked strong fourth-quarter revenue, net revenue for the full year was down 1%. We don’t anticipate making a material change to our $42 fair value estimate for narrow-moat Lazard and assess the shares as fairly valued.