Goldman Sachs Assumes, Upgrades Greenhill (GHL) to Buy

Goldman Sachs assumes coverage and upgraded Greenhill (NYSE: GHL) from Sell to Buy with a price target of $48.00.

Analyst Daniel Paris commented, "With 1) the vast majority of revenue from M&A advisory (with a favorable historic tilt towards European/cross-border transactions), 2) meaningful margin expansion potential and 3) a commitment to an outsized dividend (already offers a dividend yield in the top 7% of the Russell 2000)/ flat share count, we see considerable leverage to an improving M&A cycle."

He added, "Additionally, the recent Cogent Partners acquisition should add a layer of revenue stability. With a large portion of the sell-side (8 of 10 analysts have a sell/neutral rating) and the buy-side (short interest is 11% of float) negative on shares (following 3 straight years of no advisory revenue growth), we believe a re-acceleration of growth in 2015/2016 will lead to a recovery in shares. Since being added to the Americas Sell List on 1/13/2015, shares of GHL are down -2%. Over the same period, the S&P 500 is up 5%."

Catalysts cited by the analyst:

1) GHL’s revenue model isn’t broken:

2) Mix has been a drag but the tides are turning

3) Shareholder friendly model will pay more than one dividend

For an analyst ratings summary and ratings history on Greenhill click here. For more ratings news on Greenhill click here.

Shares of Greenhill closed at $40.01 yesterday.

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