How To Play A Rebounding M&A Space: A Look At M&A Brokers

In a report issued Tuesday, Credit Suisse analyst Ashley N. Serrao upgraded the whole M&A brokers sector from Underweight to Neutral, on beliefs that expectations surrounding the M&A cycle “have become overly pessimistic.”

However, the experts at Credit Suisse reiterated their “call for a flatter and longer M&A cycle than those seen in the past with the next leg driven by a pick-up in European and sponsor M&A as U.S. growth slows.”

A Few Specifics

Moreover, the note assured, the firm thinks investors’ appreciation of “the slower growth trajectory for pure-play firms” like
Moelis & CoMC
Greenhill & Co., Inc.GHL
is more adequate, given the increased competition – for both revenues and talent – from fast-growing private advisors (Centerview, Perella Weinberg) and other players with better scale like
Lazard LtdLAZ
Evercore Partners Inc.EVR
, and several “headwinds from an increasingly crowded public arena with other differentiated growth stories following the recent IPO of
Houlihan Lokey IncHLI
and looming spin-off of PJT Partners.”

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Within the research firm’s universe, the analysts still recommend “paying up for scale, exposure to the two E’s Europe & Energy and non-M&A revenue streams.”

Following the recent market pullback, however, Credit Suisse’s top pick continues to be Lazard, trailed by Evercore.

  • Shares of Moelis & Co are up about 3.7 percent on Tuesday trading.
  • Greenhill & Co.’s stock is also surging, almost 1.5 percent, while Evercore is up almost 0.9 percent.
  • On the other hand, Lazard is down about 1 percent.
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