Bloomberg News

Lazard Shares Climb Most Since February as Merger Fees Double

May 01, 2014

Lazard Ltd. (LAZ:US) rose the most since February after reporting a surge in first-quarter profit that beat analysts’ estimates.

Lazard jumped 5.1 percent to $49.45 at 3:22 p.m. in New York after saying profit more than quintupled and fees from advising on mergers doubled.

“We and a lot of others became more constructive on the macroeconomic environment in the middle of last year, early last year,” Chief Executive Officer Kenneth Jacobs, 55, said in an interview. “I think we’re starting to see the impact of that on CEO confidence and sentiment in a positive way.”

Jacobs, 55, said in February that the U.S. economy was improving, giving companies more confidence to do deals. The value of takeovers announced in 2014 hit $1 trillion this week, reaching that level at the fastest pace in seven years after more than $300 billion in deals were announced in April. The $1 trillion threshold wasn’t crossed until June last year.

Net income increased to $80.8 million, or 61 cents a share, from $15.4 million, or 12 cents, a year earlier, the Hamilton, Bermuda-based company said today in a statement. Profit exceeded the 54-cent average estimate of 13 analysts surveyed (LAZ:US) by Bloomberg.

Financial-advisory revenue climbed 64 percent to $275.5 million from a year earlier, as fees from advising on mergers doubled to $239.1 million, a record for the first quarter. That contributed to a 31 percent increase in operating revenue, which climbed to $540.2 million.

‘Animal Spirits’

“We’re starting to see those signs of sentiment improving,” Devin Ryan, an analyst at JMP Securities LLC, said in an interview before earnings were released. “The animal spirits of companies are coming back to the market to pull the trigger on deals.”

Lazard said in the statement that the jump in merger revenue was also partly the result of “a relatively low level of completions” in the first three months of 2013.

In asset management, Lazard posted a 9 percent revenue increase to $262.3 million, a record for the first quarter. Last year the firm generated more revenue from asset management than it did from advising on deals for the first time.

Assets under management climbed to a record average of $186 billion, up 9 percent from a year earlier and 1 percent more than in the fourth quarter of 2013.

Lazard set aside $317.8 million for compensation in the quarter, or 59 percent of revenue, compared with $248.2 million, or 60 percent, a year earlier.

Merger-advisory firms Evercore Partners Inc. and Greenhill & Co. reported profits that missed analysts’ estimates last week, saying transactions weren’t finished in time to yield fees in the first quarter.

To contact Bloomberg News staff for this story: Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steve Dickson, Steven Crabill


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Companies Mentioned

  • LAZ
    (Lazard Ltd)
    • $52.32 USD
    • 1.44
    • 2.75%
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