On Friday, Evercore ISI was downgraded by an industry analyst from Outperform to In Line, with a revised price target to $250 from $280. The adjustment comes amidst signs of slower growth in the investment banking sector, particularly in mergers and acquisitions (M&A) advisory services, equity, and debt underwriting.
The analyst from Evercore ISI cited a reduction in the 12-month price target based on a forward price-to-earnings (P/E) ratio of 17.1 times the firm's 2025 earnings estimate. This ratio is compared to the five-year historical average of 16.1 times P/E on normalized earnings.
Additionally, earnings per share (EPS) estimates for 2024 were reduced by $0.65 to $9.85, and the 2025 EPS forecast was decreased by $0.50 to $14.65.
Despite the downgrade, management at Evercore Partners (NYSE:EVR) expressed confidence during the Q2 2024 earnings call regarding the company's backlog of planned or announced transactions. Evercore Partners has been notable for securing three of the six largest globally announced M&A deals year-to-date.
In other recent news, Evercore has been the focus of several significant developments. Goldman Sachs (NYSE:GS) has upgraded Evercore's stock rating from Neutral to Buy, setting a new price target of $276. The investment firm anticipates Evercore will continue to achieve above-average growth, increase its market share and outperform its peers with a 16% per annum top-line growth from 2024 through 2026.
Evercore has also reported record second-quarter adjusted net revenues of $695 million, largely due to a 52% increase in adjusted advisory fees, totaling $568 million. This surge in revenue reflects Evercore's involvement in several substantial global transactions and its strong position in the M&A advisory market.
On the personnel front, Evercore ISI, a division of Evercore, has appointed Adam Frisch as a senior managing director. With over two decades of experience, Frisch is expected to enhance the company's research capabilities in the financial technology and IT services sectors.
Analysts anticipate the market recovery to persist through 2024 and 2025, with Evercore's focus on expanding client coverage, product capabilities, and investment in its European operations presenting a promising outlook for the company's financial performance. These recent developments highlight Evercore's robust position and growth potential in the financial sector.
InvestingPro Insights
Evercore's commitment to shareholder returns is evidenced by its impressive track record of raising dividends for 17 consecutive years, as noted in one of the InvestingPro Tips. This consistency is further underscored by the company's ability to maintain dividend payments for 18 consecutive years, showcasing its financial resilience. Additionally, analysts predict that Evercore will remain profitable this year, which is a positive signal for potential investors. The company's profitability over the last twelve months and its high return over the last decade are reflective of its solid performance in the financial sector.
From a valuation standpoint, Evercore's market capitalization stands at $10.46 billion, with a Price/Earnings (P/E) ratio of 31.03, which is higher than the industry average, indicating a premium market valuation. The company's Price/Book ratio of 6.9 also suggests a high valuation level relative to its book value. On the growth front, Evercore has achieved a revenue growth of 5.83% over the last twelve months as of Q2 2024, with a substantial quarterly revenue growth of 38.01% in Q2 2024, reflecting a strong performance in a challenging market.
Investors looking for more detailed analysis and additional InvestingPro Tips on Evercore can find them at https://www.investing.com/pro/EVR. The platform offers a total of 11 tips, providing a comprehensive overview of Evercore's financial health and investment potential.
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