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Lazard Stock Touches 52-Week High: What Should Investors Do?
LazardLazard(US:LAZ) ZACKSยท2024-09-26 17:16

Core Viewpoint - Lazard, Inc. (LAZ) has shown strong stock performance, gaining 21.2% over the past six months and reaching a 52-week high of $51.46, outperforming industry peers [1][3] Group 1: Financial Performance - The company's emphasis on strategic alliances and cost-containment measures has strengthened its financial performance, with a compound annual growth rate (CAGR) of 3.2% in assets under management (AUM) from 2016 to 2023 [3][7] - Despite a decline in operating revenues in 2022 and 2023, the company has maintained a CAGR of 1.2% over the past seven years, with an upward trend continuing into the first half of 2024 [8] Group 2: Strategic Initiatives - Lazard is expanding its AUM through strategic partnerships, including a recent agreement with Elaia Partners to launch a new asset management service focused on private market solutions in the technology sector [4][5] - The establishment of Lazard Elaia Capital aims to launch a growth capital fund for private technology companies, aligning with the company's long-term strategy to meet evolving client needs [5] Group 3: Cost Management - The company is actively working on cost-containment measures, with expenses remaining flat in the first half of 2024 after previous declines [10] - Lazard aims to maintain a compensation ratio in the mid-to-high 50% range and a non-compensation ratio of 16-20% in the near term [12] Group 4: Challenges - Lazard has faced continuous net outflows, particularly in the equity asset class, with net outflows of $13.2 billion in the first half of 2024 [13] - The company's capital distribution activities raise concerns, with a dividend payout ratio of 103% and a low annualized dividend growth rate of 1.80% [15][16] Group 5: Market Position - Lazard's stock is currently trading at a price-to-earnings (P/E) ratio of 13.27, which is lower than the industry average of 14.64, indicating it may be undervalued [19]