Lazard Stock Price Forecast as AUM and Investment Banking Slips

The Lazard stock price has crashed hard in 2022 as demand for investment banking services crash around the world. LAZ shares are trading at $33, which is about 35% below the highest level in 2022. Its market cap has dropped to $3.2 billion.

Investment banking slowdown

Lazard is one of the most elite investment banks globally, The firm, which was started in 1848, is known for its strict hiring process and the “intelligence” of its executives. It offers its services through two segments: financial advisory and asset management.

In its financial advisory industry, the company offers advisory services like mergers and acquisitions, restructurings, capital raising, and shareholder advisory among others. Its clients include large companies and governments.

In its asset management business, the company provides investment solutions across most asset classes like alternative assets, fixed income, global equity, and emerging markets among others. This division has over $274 billion in assets under management. According to its report, financial advisory accounts for about 55% of its total revenue.

Lazard stock price has been under pressure in 2022 because of the ongoing slowdown in investment banking. Indeed, shares of most investment banks like Moelis, Houlihan Lokey, and Evercore have also performed worse in 2022. Large investment banks like Goldman Sachs and Morgan Stanley have also lagged.

The main reason is that the number of deals being made in 2022 has been significantly lower. For example, as shown below, global M&A has dropped by 26% this year to about $2.6 trillion. It has happened across the world, with US falling by 36% to $988 billion.

Investment banking
Investment Banking is struggling

As a result, global investment banking revenue has crashed. According to WSJ, this revenue has fallen by 39% to $43.7 billion. In the US, investment banks have earned over $20 billion in revenue. Most of this revenue has gone to large players like JP Morgan, Goldman Sachs, Bank of America, and Morgan Stanley.

Asset management slowdown

The Lazard stock price has also declined because of the ongoing decline in its assets under management. The firm’s AUM dropped by 8.2% in June to $216 billion from $235 billion in May. This means that the company is earning less fees. In March, the firm had an AUM of over $253 billion

Further, with its revenue expected to slow, Lazard will see elevated costs, since, like all investment banks, it dramatically increased its headcount during the investment banking boom of the past few years.

Therefore, analysts believe that Lazard will see its business go through its worst year in more than a decade. Still, the weak performance in deal-making will likely be offset by a surge in restructurings as interest rates rise. High interest rates will likely push many zombie companies to restructure their operations. To do that, they will use the services of companies like Lazard and Houlihan Lokey.

Lazard stock price forecast

Lazard stock price
Lazard stock price chart

Turning to the daily chart, we see that the Lazard share price has gone nowhere in the past few weeks. It has remained in a tight range between $31 and $36.41. This price is substantially lower than its 2021 high of $51. The stock is also below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the neutral point at 50.

Therefore, there is a likelihood that the Lazard stock price will soon have a bearish breakout since the channel seems like a bearish flag pattern. 

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