Legg Mason’s Flow Trends Mixed, Restructuring On Track
Analysts at Sterne Agee reiterate their "neutral" rating on Legg Mason Inc (NYSE: LM), while raising their estimates for the company. The target price for LM is set to $34.
LM reported its Q1 earnings short of the estimates. Sterne Agee says, “Excluding closed end fund issuance costs and restructuring costs (which weren’t in our estimate) EPS would have been $0.38, $0.03 higher than our estimate. The strength was driven by higher than expected fund advisory fees reflecting a stronger average fee rate as well as a stronger distribution margin (ex. closed-end fund launch).”
“Total net outflows of $23.1 billion were better than the outflows of $25.3 billion we modeled. The stronger than expected result reflects equity inflows of $700 million (first inflows in over 4 years) driven by the $1.3 billion closed-end fund launch…. However, management continues to point to a turnaround in fixed-income flows in the coming quarters. Liquidity outflows of $14.4 billion were roughly in line with the $15.1 billion of outflows we modeled,” the analysts mention.
Sterne Agee has raised its EPS estimate for 2011 from $1.70 to $1.79.
