UBS Remains Sidelined Following Moelis & Company's (MC) 4Q EPS Beat
UBS remained Neutral on Moelis (NYSE: MC), and cut the price target to $25.00 (from $31.00), following the company's 4Q earnings report. Moelis reported adjusted pro forma EPS of $0.55, above the consensus of $0.51 per share. The beat was driven by higher revenues, and was partly offset by higher non-comp expenses. Given the low float of MC shares, the company announced that it will pay a $0.80 per share special dividend in 1Q, which when added to the annualized $0.30 per share quarterly dividend, results in a current yield of roughly 4.4%.
Analyst Brennan Hawken commented, "Moelis reported 4Q adjusted pro forma EPS of $0.55, above our estimate of $0.48 and consensus of $0.51 per share. The beat was driven by higher revenues ($175 million vs. our estimate of $158 million), partly offset by higher non-comp expenses. Echoing what other peers have said, financing for non-IG deals has become very difficult, which may eventually lead to a slowdown in MC's financial sponsor business, but they haven't seen that impact yet. Notably, restructuring activity was highlighted as picking up across the commodity sectors (with some early signs of leakage into other sectors) and we believe that business will pay dividends when the M&A cycle eventually slows. Importantly, the company's restructuring footprint is double the size it was in 2010 and activity is currently up 50% vs 2015, which was not a bad year for the restructuring business."
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Shares of Moelis closed at $24.83 yesterday.