BMO Capital analyst Brennan Hawken maintained a Hold rating on Moelis yesterday and set a price target of $70.00.
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Brennan Hawken has given his Hold rating due to a combination of factors influencing Moelis’s financial performance and outlook. Although the company reported an adjusted EPS that surpassed expectations, this was primarily due to lower-than-anticipated compensation expenses, rather than revenue growth. The advisory revenue fell short of consensus estimates, even after accounting for gains from the sale of shares in MA Financial Group, indicating that core revenue was weaker than reported.
Additionally, while non-compensation expenses and non-operating income provided some positive surprises, higher tax rates and a reduction in managing director headcount suggest potential challenges ahead. The decision to lower future earnings estimates and the target price reflects concerns over high compensation costs, leadership changes, and competitive pressures. These factors, combined with a challenging valuation, underpin the Hold rating, as stability and increased sponsor engagement are needed for a more favorable outlook.
According to TipRanks, Hawken is a 5-star analyst with an average return of 13.1% and a 59.87% success rate. Hawken covers the Financial sector, focusing on stocks such as Raymond James Financial, Jefferies, and Invesco.