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Lazard Ltd Shs A LAZ

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Morningstar’s Analysis

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Lazard Reports Strong Close to 2020, and M&A Outlook Remains Healthy

Michael Wong, CFA, CPA Sector Director

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.

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Company Profile

Business Description

Lazard has a storied history that can be traced back to 1848. The company's revenue is nearly equally split between financial advisory, such as acquisition and restructuring advisory, and asset management. The company's asset management business is primarily equities (over 80% of assets under management), has an international focus, and is geared toward institutional clients. By geography, the company earns approximately 60% of revenue in the Americas, 30% in EMEA, and 10% in Asia-Pacific. Lazard has offices in over 40 cities across more than 25 countries and over 2,900 employees.

2 Church Street, Clarendon House
Hamilton, HM11, Bermuda
T +1441 2951422
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 3,099