Lazard Ltd.'s Business Trajectory 'Appears Stronger Than Valuation Appreciates," Says JMP

In a report published Wednesday, JMP Securities analyst Devin Ryan initiated coverage of

with a Market Outperform rating and $62 price target given a view that the company's business has been improving at a better rate than reflected in valuation. Ryan noted that shares of Lazard returned a "respectable" 13 percent in 2014 and have returned another five percent year-to-date. However, the analyst added that the company's multiple has been contracting and now trade at 14x 2015E earnings per share ($3.61), lagging its historical average of approximately 16x. "Taking a deeper dive into Lazard's backlog of advisory activity gives us greater confidence in the firm's revenue potential," Ryan wrote. The analyst further added that the backlog includes a "healthy level of activity outside of the widely used public data sources." Ryan added the a backlog analysis suggests 80 current deals, totaling over $350 billion of deal value in aggregate that translates to over $600 million of advisory revenues in the backlog, a figure which could prove to be conservative. Ryan concluded by stating that the first quarter 2015 could be the "softest" quarter (although still "solid") with advisory revenues accelerating as the year progresses.