Keefe Bruyette & Woods Inc. analyst Michael Brown initiated coverage on a number of independent M&A advisory firms. He thinks that the market is pricing in a forthcoming end to the current M&A cycle, but that the existing environment remains favorable for the M&A advisers.
Brown initiated coverage of Houlihan Lokey Inc.'s stock rating at "outperform," and set a price target of $47.
The analyst wrote that Houlihan has potential to grow its market share through mergers and acquisitions. He selected this stock as his top pick.
The company has a middle-market focus for mergers and acquisitions, comparatively more stable and recurring revenues that are generated by its financial advisory services business, and a solid restructuring franchise. These elements make Houlihan's business more stable and countercyclical in comparison with its peers.
The analyst initiated coverage of Moelis & Co.'s stock rating at "outperform," and set a price target of $43.
According to the analyst, Moelis has the potential for solid organic revenue growth through increased productivity from existing advisers, recruitment and strategic partnerships.
Brown also expects Moelis' growth rate to slow down as it will continue to grow off a larger base, but the company still has the potential to grow across sectors and geographies.
Brown's EPS estimates for Moelis are $2.95 for 2018, $3.00 for 2019, and $3.10 for 2020.
Brown initiated coverage of Lazard Ltd.'s stock rating at "market perform," and set a price target of $41.
The analyst wrote that there is growth potential across Lazard's advisory and asset management businesses.
The company, in comparison with its peers, has a more diversified advisory business while on the asset management side, it is positioned well to generate organic growth because of the company's global scale, institutional bias, and unique mix of strategies.
Brown's EPS estimates for Lazard are $4.17 for 2018, $4.10 for 2019, and $4.40 for 2020.
Brown initiated coverage of Evercore Inc.'s stock rating at "market perform," with an $82 price target.
According to him, the company is strongly positioned against its peers in advisory and institutional equities.
The analyst wrote that Evercore's strong growth over the past few years has been supported by solid recruitment and strong capabilities in certain sectors that have acted as catalysts for a large proportion of total deal activity.
Brown's EPS estimates for Evercore are $7.46 for 2018, $7.10 for 2019, and $7.15 for 2020.
The analyst initiated coverage of Greenhill & Co. Inc.'s stock rating at "market perform," and established a price target of $26.
Greenhill lost market share as it was in a less favorable position for this mergers and acquisitions cycle, and because it focused on large deals while being relatively smaller than its peers.
Brown believes that the strong revenue generation by the company in 2018 is an indicator that Greenhill may start growing again. He also believes that Greenhill has significant opportunities to expand its capabilities in terms of sectors and geographies.
The analyst's EPS estimates for Greenhill are $1.48 for 2018, $1.75 for 2019, and $2.00 for 2020.