Lazard's Cost Containment Remains in Place - Analyst Blog

On April 1, 2014, we issued an updated research report on Lazard Ltd. LAZ. The company's disciplined expense management as well as persistent rise in revenues remains the key positives. Moreover, the company reported better-than-expected fourth-quarter 2013 results.

In the present economic scenario wherein most of the companies are finding to difficult to mange expenses, Lazard has succeeded in pulling the reins on costs through successful implementation of cost savings plan. The company had announced cost savings of $125 million initially, which has now been extended to $160 million. Notably, Lazard has already realized two-third of targeted savings last year and now expects to achieve the remaining by 2014.

Moreover, in 2013, Lazard recorded a 12% year-over-year increase in assets under management. We expect the uptrend to continue in the coming quarters with further improvement in the equity market. Also, the company's capital deployment activities have been commendable. In Jan 2014, it hiked its dividend by 20% to 30 cents per share.

Additionally, Lazard's fourth-quarter earnings per share of 81 cents surpassed the Zacks Consensus Estimate by 35.0%. Strong results triggered an upward revision in the Zacks Consensus Estimate, as analysts turned more bullish on the stock's future performance.

While the Zacks Consensus Estimate for 2014 increased 6.0% to $2.65 per share, for 2015 it advanced 5.7% to $3.17 per share over the last 60 days. Lazard now sports a Zacks Rank #1 (Strong Buy).

However, we remain concerned about Lazard's diversified footprint, which subjects it to risks arising from tightening regulations, political tensions, foreign exchange rate fluctuations and performance of regional economy.

Stocks That Warrant a Look

Other investment managers worth considering include AllianceBernstein Holding L.P. AB, Calamos Asset Management Inc. CLMS and Fortress Investment Group LLC FIG. All these stocks have the same Zacks Rank as Lazard.