Shares of Lazard Ltd. fell Tuesday after the investment bank reported a 70 percent drop in first-quarter earnings, due to a decline in financial advisory revenue and investment losses.
Shares fell $2.04, or 5.4 percent, to $35.46. Shares have traded between $29 and $55.45 in the past 12 months.
Earlier Tuesday, the Bermuda-based bank said its first-quarter earnings were hurt by a 5 percent decline in revenue at its financial advisory division, tied to a drop in mergers and acquisitions and strategic advisory revenue. Lazard also recorded a loss of $39.7 million because of write-downs and losses in its Paris bank's portfolio.
Citi Investment Research analyst Prashant Bhatia subsequently chopped his full-year profit estimate to $1.60 per share from $2.25 per share on a lower M&A revenue forecast. Analysts polled by Thomson Financial, on average, estimate earnings of $2.79 per share.
"The challenging environment is taking a toll on Lazard's M&A revenue and the outlook is cloudy at best for the remainder of the year," Bhatia wrote in a note to investors. "We are forecasting a 30 percent decline in financial advisory revenue."
As of April 30, Lazard's M&A pipeline was $113 billion, down from $391 billion in August 2007, reflecting a lack of large deals in recent months, Bhatia said. He maintained a "Hold" rating on the shares.
Banc of America Securities analyst Michael Hecht, meanwhile, was more optimistic about M&A activity going forward. Hecht, who maintained a "Buy" rating and a $59 target price on the stock, said he continues to expect a resurgence in strategic-buyer led M&A this year.
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