Market Overview

Goldman Expecting Underwhelming Q1 For Advisors; Downgrades Greenhill

Share:

America’s Brokers and Advisors segment has witnessed some M&A activity so far in 2016, despite a volatile market backdrop at the beginning of the year. Goldman Sachs’ Daniel Paris noted that a low rate, low growth backdrop is favorable for continued consolidation.

Analyst Daniel Paris added, however, that the earnings of most players in the segment are at risk due to deal completions, underwriting fees and retail trading.

Greenhill’s Earnings At Risk

Paris downgraded the rating for Greenhill & Co., Inc. (NYSE: GHL) from Buy to Neutral, saying that he believes the company faces the highest risk.

“While our base case view is that GHL will not need to cut its current dividend (given a strong revenue backlog), we see risk that a weak 1Q EPS print will reignite the dividend sustainability debate and cause shares to trade on a straight P/E valuation basis (which will likely screen as expensive vs. peers post EPS),” the analyst wrote.

Paris identified Greenhill’s outsized exposure to UK deals and cross-border tax inversion rules as the other risks facing the company.

The pressure on both deal announcements and completions during 1Q resulted in elevated revenue backlogs, providing support for earnings over the next two quarter, Paris noted. He added, however, that there is likely to be pressure for advisors in 1Q, since they did not witness strong completion volumes.

Goldman Sachs expects Moelis & Co (NYSE: MC) and Evercore Partners Inc. (NYSE: EVR) to meet the consensus 1Q EPS expectations easily. Paris believes that Greenhill, Lazard Ltd (NYSE: LAZ) and Houlihan Lokey Inc (NYSE: HLI) would find it difficult to meet earnings expectations.

Latest Ratings for GHL

DateFirmActionFromTo
Nov 2020Keefe, Bruyette & WoodsDowngradesMarket PerformUnderperform
Oct 2020Keefe, Bruyette & WoodsUpgradesUnderperformMarket Perform
Jul 2020Piper SandlerMaintainsNeutral

View More Analyst Ratings for GHL
View the Latest Analyst Ratings

 

Related Articles (GHL + MC)

View Comments and Join the Discussion!

Posted-In: Daniel Paris Goldman SachsAnalyst Color Upgrades Analyst Ratings

Latest Ratings

StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
CYBBFCitigroupDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com