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On Tuesday, Citizens JMP analyst Devin Ryan upgraded shares of Evercore Partners (NYSE:EVR) from Market Perform to Market Outperform, with a new price target of $230.00. The revised price target suggests a 40% potential upside from the current trading price, based on an approximate 14 times cross-cycle price-to-earnings (P/E) multiple on Evercore's normalized earnings per share (EPS) estimate of $16. According to InvestingPro data, the stock currently trades at a P/E ratio of 16.5x, with recent financial metrics indicating the stock may be undervalued relative to its fundamentals.
Ryan's upgrade reflects a positive outlook on Evercore's valuation, especially after the stock experienced substantial pressure with the slower start of the year in mergers and acquisitions (M&A) announcements. The analyst noted that Evercore was initially trading at 17.3 times the 'normalized' EPS estimate but has since corrected to about 10 times. This valuation is deemed attractive when compared to the historical forward multiple of around 14 to 15 times.
The price adjustment comes after Evercore's shares had arguably overshot their fundamentals, buoyed by investor confidence in a potential M&A recovery through 2024. However, the slower-than-expected pace in the M&A sector at the beginning of the year led to a reevaluation of the stock's performance.
Despite the initial downturn, Ryan's analysis suggests that the current trading price does not fully reflect Evercore's earnings potential. The new price target of $230 is based on a cross-cycle P/E multiple that aligns more closely with historical trends.
Evercore Partners, a premier global independent investment banking advisory firm, is now perceived by Citizens JMP as poised for significant growth, with the new Market Outperform rating indicating a strong conviction in the company's future performance relative to the market.
In other recent news, Evercore Partners Inc . reported its fourth-quarter 2024 earnings, exceeding analyst expectations with an earnings per share (EPS) of $3.41, surpassing the forecast of $3.04. The company's revenue also outperformed projections, coming in at $975.33 million compared to the anticipated $906.67 million. For the full year, Evercore's adjusted net revenues rose by 23% to $3 billion. In another development, Evercore is collaborating with Sitetracker Inc. for a potential sale valued at approximately $1 billion. This collaboration is in the early stages, with private equity firms and industry competitors being potential buyers.
In analyst updates, Morgan Stanley (NYSE:MS) downgraded Evercore's stock from Overweight to Equalweight, citing concerns over the downturn in merger and acquisition (M&A) activity, a significant revenue source for the firm. Conversely, Keefe, Bruyette & Woods raised Evercore's price target to $339 while maintaining an Outperform rating, highlighting the company's strong advisory services. The firm also noted that Evercore's compensation strategy might impact its share performance, despite a positive outlook on market recovery. These recent developments reflect a mix of optimism and caution surrounding Evercore's financial prospects and strategic initiatives.
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