Houlihan Lokey Estimates Cut by Morgan Stanley as Sponsor M&A Recovery Lags

MT Newswires Live07-09 20:34

Investment banking advisory firms are expected to benefit from large corporate M&A activity, though a slower recovery in sponsor-backed deals could weigh on the sector ahead of Q2, Morgan Stanley said in a note on Thursday.

The firm lowered its estimates for Houlihan Lokey (HLI) and Lazard (LAZ) ahead of Q2 earnings, while remaining more constructive on Evercore (EVR) and Moelis & Company (MC).

Morgan Stanley cut its Q2 EPS estimate for Houlihan Lokey by 17% to $1.73, citing weaker corporate finance revenue and a higher tax rate, and also lowered its fiscal 2027 and 2028 EPS forecasts.

The firm also trimmed its stock price target for Houlihan Lokey to $187 from $193.

Morgan Stanley said Evercore and Moelis are its preferred names heading into earnings, expecting Evercore to benefit from strong large-cap strategic M&A, equity capital markets activity and trading, while Moelis is viewed as best positioned to deliver strong top-line results.

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