UBS Raises Price Target on Greenhill & Co. (GHL) to $17; Reiterates Sell

October 25, 2016 9:10 AM EDT
Get Alerts GHL Hot Sheet
Price: $27.75 +1.09%

Rating Summary:
    4 Buy, 8 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 22 | Down: 17 | New: 13
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UBS reiterated a Sell rating on Greenhill & Co. (NYSE: GHL), and raised the price target to $17.00 (from $13.00), following the company's 3Q earnings report. GHL reported EPS of $0.41, missing consensus estimates of $0.42. 4Q16 EPS estimates go up by 43c to $0.53 due to a much higher near-term outlook for advisory revenue that trickles into early 2017, which also drives our 2017 EPS estimates higher by 30c to $1.15.

Analyst Brennan Hawken commented, "GHL reported 3Q EPS of $0.41, beating our estimate of $0.40 but missing consensus of $0.42. Relative to our estimate, operating income missed as lower advisory revenues (8c headwind) were partially offset by lower comp (3c tailwind) and lower non-comp (4c tailwind). However, EPS beat our estimate due to a lower tax rate (3c tailwind) as GHL derived more revenue outside the US. Notably, cash dropped from $63.8 million at 6/30 to $55.8 million at the end of 3Q, but cash outside the US was largely unchanged ($45.1 million at 6/30). Interestingly, the cash dropped despite drawing down another $7.6 million on the revolver in order to prepay $5.6 million in term debt due in October. Consequently, these results do little to ease our longer-term concerns about GHL's balance sheet leverage, limited backlog, and upcoming bonus payments."

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 $23.55 yesterday.

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