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Analyst Blog

Shares of Legg Mason Inc. (LM - Analyst Report) achieved a new 52-week high, touching $32.96 in the beginning of the trading session on May 6. The closing price of this well-know asset manager represents a solid year-to-date return of 24.6%. The average trading volume over the last 3 months was 1.7 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left given its strong estimate revisions over the last 7 days and the expected year-over-year earnings growth of 25.7% for fiscal 2014.

Growth Drivers

Strong assets under management (AUM) position – including year-over-year growth of 3% – and solid capital deployment activities, including a dividend increase in Apr 2013, have been the primary growth drivers for Legg Mason.

On Apr 30, Legg Mason reported AUM of $664.6 billion, up 3.0% year over year, driven by market appreciation of $34.2 billion. Fixed income represented 55% of consolidated AUM as of Mar 31, 2013, liquidity represented 21% and equity comprised 24%. Besides, average AUM was $657.4 billion, up 3.5% from $634.9 billion in the prior-year quarter.

Estimate Revisions Show Potency

For Legg Mason, over the last 7 days, 1 of the 6 estimates for fiscal 2014 has been revised upward, lifting the Zacks Consensus Estimate by 8.6% to $3.28 per share. For fiscal 2015, 1 of the 5 estimates moved north, helping the Zacks Consensus Estimate advance 19.4% to $3.44 per share.

Some better performing investment managers include Invesco Ltd. (IVZ - Analyst Report), AllianceBernstein Holding L.P. (AB - Snapshot Report) and Virtus Investment Partners, Inc. (VRTS - Snapshot Report). All these carry a Zacks Rank #1 (Strong Buy).

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