Nomura Securities Maintains a 'Neutral' on Legg Mason (LM); Cuts Estimates After Q1 Report

Nomura Securities maintains a 'Neutral' on Legg Mason (NYSE: LM) price target lowered to $24.00.

Analyst, Glenn Schorr, said, "Results included a debt retirement charge of $0.32/share and fund launch costs of $0.11/. Excluding these items, we put a “clean” EPS at +$0.36 vs. our comparable $0.49. Long-term net outflows were $3.8B (3% organic decay), down from $7.7B outflows in the prior quarter. Operating revenue fell 3% on lower performance fees and adverse mix shift. Adj op. margins fell 430bps q/q to 16.9% on higher fund launch costs. We think LM is limited in what it can do on margins, given no more transition cost saves, adverse mix shift, and new rebranding campaign. We revise our estimates lower, mostly driven by higher expenses and lower Q3 market gains."

2Q12E EPS from $0.61 to $0.59; 4Q12E EPS from $52 to $0.48; F12E EPS from $1.75 to $1.49; 1Q13E EPS from $0.56 to $0.54; 2Q13E EPS from $0.59 to $0.56; 3Q13E EPS from $0.63 to $0.58; 4Q13E EPS from $0.63 to $0.59; F13E EPS from $2.40 to $2.29.

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

Shares of Legg Mason closed at $24.86 yesterday.

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