Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Deutsche Bank initiated coverage of Moelis (NYSE:MC), currently valued at $5.3 billion, with a Buy rating and an $80 price target on Thursday. According to InvestingPro data, the stock is currently trading below its Fair Value.
The investment bank noted that Moelis shares have underperformed advisory peers for several years, primarily due to costs from aggressive hiring that began in 2023 amid weak industry revenues, resulting in negative operating margins that year. Despite this, the company maintains a strong 42.85% revenue growth and an impressive 92.5% gross profit margin.
Deutsche Bank believes this underperformance is fully priced into the stock, with Moelis trading below historical relative P/E levels despite consensus forecasts projecting meaningful EPS growth in coming years.
The bank suggests market concerns about CEO Ken Moelis’ transition are "overblown" given the company’s deep bench of senior leadership, and argues investors are undervaluing Moelis’ leverage to a cyclical recovery.
Deutsche Bank highlighted Moelis’ demonstrated ability to outperform during bull cycles, pointing to 2021 when the company gained more market share than peers while reporting higher managing director productivity and leading EPS growth.
In other recent news, Moelis & Company announced its second-quarter 2025 earnings, significantly surpassing analysts’ expectations. The company reported an earnings per share (EPS) of $0.53, compared to the forecasted $0.36, which represents a 47.22% surprise. Additionally, Moelis achieved revenue of $365 million, exceeding the anticipated $300.53 million and marking a 21.59% surprise. Despite these strong earnings results, BMO Capital recently initiated coverage on Moelis with a Market Perform rating and set a price target of $74.00. BMO Capital noted Moelis as a pioneer in adopting a sponsor-centric advisory strategy and highlighted the potential for expanding its Private Capital Advisory business. These developments reflect the company’s current financial performance and strategic positioning in the market.
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