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Why You Should Hold on to Lazard (LAZ) Stock for Now

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On Dec 27, we issued an updated research report on Lazard Ltd. (LAZ - Free Report) . The company remains well poised to benefit from improving economic backdrop along with its consistent efforts to drive efficiency and revenues. However, heavy reliance on overseas revenues might impede top-line growth.

The Zacks Consensus Estimate for Lazard’s current-year earnings has remained stable in the past 60 days. The stock currently carries a Zacks Rank #3 (Hold).

The company’s shares have lost 25.3% over the past six months compared with the industry’s decline of 23%.

Looking at the fundamentals, Lazard’s revenues witnessed a compound annual growth rate (CAGR) of 4.3% over a period of four years (2014-2017). The increasing trend continued in first nine months of 2018 as well. While diversified assets under management (AUM) contributed to the asset management segment, the financial advisory segment’s growth was driven by a strong team of experienced professionals.

Lazard has also been trying to expand its operations globally through various acquisitions. Notably, in 2016, the company acquired Canada-based Verus Partners — an independent boutique. The company also acquired the remaining 50% stake in MBA Lazard — its financial advisory business in Latin America — to strengthen the bank’s operations in the region, as well as global markets.

Lazard’s AUM witnessed a CAGR of 8.2% over a period of four years (2014-2017), with the trend continuing in the first three quarters of 2018. Its investment strategies in the global, local and emerging markets in both equities and fixed income, led to this increment, which will likely continue.

However, Financial Advisory revenues contribute nearly 52% to Lazard’s total revenues. The increased dependence on this segment could adversely affect the company’s financials in the near term, as advisory fees are usually paid upon the successful completion of a transaction. Hence, a decline in advisory engagements would adversely affect its business, financial condition and operations.

Stocks to Consider

Equity Bancshares, Inc. (EQBK - Free Report) has witnessed 2.1% upward estimate revision over the past 60 days. Also, the company’s shares have risen nearly 4% in the past two years. It has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Second Bancorp’s (OSBC - Free Report) estimates have remained stable for current-year earnings over the past 60 days. Also, the company’s shares have risen nearly 15% in the past two years. It carries a Zacks Rank #2.

The Zacks Consensus Estimate for Amalgamated Bank’s (AMAL - Free Report) current-year earnings has been revised 2.2% upward over the past 60 days. Also, the company’s shares have risen nearly 14% in the past two years. It currently carries a Zacks Rank of 2.

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