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Evercore (EVR) is drawing fresh investor attention after adding two senior managing directors to its financial sponsors group in London and New York, and securing an Arranging License and a new office in Riyadh.
See our latest analysis for Evercore.
The recent senior hires, together with the Riyadh office and Saudi arranging license, come as Evercore’s 1 month share price return of 13.61% and 90 day share price return of 21.59% lift the stock to US$383.12, while its 1 year total shareholder return of 38.83% and very large 5 year total shareholder return suggest momentum has been building over several years.
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With Evercore now trading around US$383, close to recent analyst targets and showing a value score of 1, yet an estimated intrinsic value gap of about 5%, the question is whether there is still upside potential or if the market is already pricing in future growth.
Evercore’s most followed narrative sets a fair value of about US$354 against the latest close at US$383.12, framing the current debate around how much optimism is already in the price.
The ongoing globalization of capital markets and an accelerating trend in cross-border M&A activity are providing an increasingly fertile environment for independent, conflict-free advisors like Evercore. The firm’s continued expansion into key international markets, as evidenced by new offices and hiring in EMEA (France, Spain, Italy, Dubai, UK), positions it to capture an increasing share of growing advisory fee pools and drive top-line revenue over the long term.
Curious how this story supports a higher valuation today, yet still assumes a lower future earnings multiple and thicker margins tomorrow? The full narrative walks through the revenue ramp, the profit step up, and the earnings power that has to materialize for that fair value to hold.
Result: Fair Value of $353.56 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, there is still the risk that high compensation costs and weaker M&A volumes could pressure margins and challenge the earnings assumptions behind this story.
Find out about the key risks to this Evercore narrative.
While our DCF model points to Evercore trading about 5% below an estimated fair value of US$403.22, the market price of around US$383 also comes with a P/E of 28x, compared with 25.6x for the US Capital Markets industry, 20.7x for peers, and a fair ratio of 17.3x.
