Lazard, Jefferies jump as Morgan Stanley upgrades on M&A rebound

Houlihan Lokey

12/07/2023 15:40

** Morgan Stanley says lower volatility and recovering
markets point to an M&A inflection in 2024, upgrades its Midcap
Advisors industry view to "attractive" from "in-line"
    ** In turn, MS upgrades Lazard Ltd  LAZ.N  to "overweight"
from "equal-weight" and raises Jefferies Financial  JEF.N  to
"equal-weight" from "underweight"
    ** Shares of LAZ rise 4.4% to $34.19, highest since Apr 25.
JEF's stock up 5.6% at $35.48, highest since Mar 9
    ** LAZ trading at only 7.7x 2024 PE, ~4 turns below its
2017-2019 avg fiscal year PE multiple, and best positioned for
strategic transactions rebound among M&A boutiques, MS analysts
say
    ** Regarding JEF, MS expects Japan's Sumitomo Mitsui Banking
Corp  8316.T  to begin buying shares this month, and price
support drives its upgrade
    ** In Apr, Sumitomo said it planned to triple its JEF stake
and deepen ties with the U.S.-based investment bank
    ** MS says multiples should re-rate higher as growth outlook
improves, managements discuss green shoots, and conviction in
its base case rebound outlook grows
    ** Brokerage raises PTs by median of 25% for coverage
universe, driven by median 10% increase in target PE multiples
and median 14% increase in 2024 EPS
    
        
                          Old PT  New PT
 Evercore         EVR.N    $128    $153 
 Houlihan Lokey   HLI.N     $81    $101 
 Jefferies        JEF.N     $27     $36 
 Moelis & Co      MC.N      $29     $39 
 Lazard           LAZ.N     $36     $43 
 

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))