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Investing.com - Morgan Stanley (NYSE:MS) upgraded Moelis (NYSE:MC) from Underweight to Overweight on Monday, raising its price target to $68.00 from $42.00. The investment bank currently trades at a P/E ratio of 23.42 and offers a 4.6% dividend yield, having maintained dividend payments for 12 consecutive years. According to InvestingPro analysis, the company shows good overall financial health with strong cash flow metrics.
The upgrade follows optimistic comments from Moelis at Morgan Stanley’s US Financials Conference, where the investment bank reported its deal pipeline is at record levels and has increased since April. The firm indicated that while interest rate cuts would be beneficial, they are not necessary for the pipeline to convert to completed deals. This confidence is supported by the company’s impressive 45.14% revenue growth over the last twelve months and strong liquidity position, with a current ratio of 2.19.
Morgan Stanley projects Moelis’ compensation ratio will improve from 69% in the first quarter of 2025 to 63% in 2026, driven by higher revenues. This improvement in the compensation ratio combined with revenue growth is expected to drive a 74% increase in 2026 earnings per share compared to 2025, and a 91% increase versus 2024. Discover more detailed financial projections and 8 additional key insights with InvestingPro’s comprehensive research report.
The investment bank’s expansion into Private Funds Advisory (PFA) is anticipated to drive significant revenue growth over time. Moelis recently hired Matt Wesley from Jefferies to lead this initiative, with plans to both reallocate internal talent and focus external hiring on building this division.
Moelis will initially concentrate on continuation funds within its PFA business, with plans to expand into other capabilities including dividend recapitalizations, limited partner stake sales, and fundraising, citing long-term structural demand for continuation funds as a major opportunity.
In other recent news, Moelis & Company reported its first-quarter 2025 results, with adjusted diluted earnings per share of $0.64, slightly below Citizens JMP’s estimate of $0.65 but above the consensus estimate of $0.59. The company’s revenues reached $307 million, marking an approximately 41% increase compared to the same quarter last year, with two-thirds of the revenue coming from mergers and acquisitions. Citizens JMP analysts maintained a Market Perform rating on Moelis, citing elevated non-compensation expenses and market uncertainty despite the revenue growth. Meanwhile, Keefe, Bruyette & Woods reaffirmed their Outperform rating for Moelis, maintaining a price target of $69, following the announcement of a leadership transition. Ken Moelis, the current CEO, will step down to become Executive Chairman, with Navid Mahmoodzadegan, the firm’s Co-President and co-founder, succeeding him as CEO. This leadership change, effective October 1, 2025, is part of a long-term transition plan. Analysts express confidence in Mahmoodzadegan’s extensive experience and strategic role within the company. The company remains optimistic about its future under the new leadership.
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