Lazard Ltd. (NYSE: LAZ) presents a compelling investment opportunity within the global financial advisory and asset management landscape. While near-term cyclical headwinds in the mergers and acquisitions (M&A) market pose challenges, the firm’s established brand, deep industry relationships, and expanding asset management platform position it for long-term value creation. This report provides an in-depth analysis of Lazard’s business model, competitive positioning, financial performance, and valuation, culminating in a “Buy” recommendation with a 12-month price target of $68.
Executive Summary
Lazard operates across two synergistic business segments: Financial Advisory, encompassing M&A, restructuring, and strategic advisory services, and Asset Management, offering investment solutions to institutional and individual clients. The firm’s robust reputation, forged over 175 years, provides a significant competitive advantage, attracting top-tier clients globally. While recent financial results reflect the cyclical downturn in the M&A market, Lazard’s strategic initiatives, coupled with an anticipated market recovery, are poised to drive future growth. We believe the current valuation undervalues the firm’s long-term potential, creating a compelling entry point for investors.
Industry Overview
The global financial advisory market remains dynamic, driven by evolving geopolitical landscapes, technological advancements, and ongoing corporate restructuring needs. While M&A activity experienced a decline in the first half of 2025, primarily due to macroeconomic uncertainties and tighter financing conditions, industry forecasts project a gradual recovery in the latter half of the year and into 2024. Growth drivers include cross-border transactions, private equity activity, and increased restructuring mandates. The asset management industry is experiencing steady growth, fueled by rising global wealth and increasing demand for sophisticated investment strategies. Lazard is well-positioned to capitalise on these trends, leveraging its global reach and expertise.
Company Analysis
Lazard’s core strength lies in its brand recognition and extensive network. The firm consistently ranks among the top three global M&A advisors, demonstrating its ability to navigate complex transactions and deliver value to clients. In Asset Management, Lazard’s focus on specialized investment strategies and strong client relationships has contributed to consistent AUM growth. However, the firm remains susceptible to cyclical fluctuations in M&A activity, which directly impact its advisory revenues. The recent focus on cost discipline and strategic initiatives under “Lazard 2030” demonstrates management’s commitment to enhancing operational efficiency and driving profitability.
Investment Thesis
Our investment thesis rests on three key pillars: First, Lazard’s premier brand and entrenched relationships within the financial community create a formidable competitive moat, enabling the firm to secure high-profile mandates and generate premium fees. Second, the expanding asset management business provides a stable recurring revenue stream, partially offsetting the volatility of advisory revenues. Third, the current valuation presents an attractive entry point, offering potential upside as M&A activity recovers and the firm’s strategic initiatives gain traction. We expect Lazard to benefit disproportionately from the cyclical upturn in M&A, driven by pent-up demand and improved market conditions.
Valuation & Forecasts
We employed a combination of valuation methodologies, including a discounted cash flow (DCF) analysis, precedent transactions, and peer comparables, to arrive at our price target. Our base case DCF model assumes a 3% revenue CAGR over the next five years, with EBITDA margins stabilizing at 25%. Our weighted average cost of capital (WACC) is estimated at 9%, reflecting Lazard’s risk profile. Our DCF analysis yields a base case valuation of $65 per share.
| Valuation Metric | LAZ | Peer Average |
|---|---|---|
| P/E (2026E) | 16.5x | 18.0x |
| EV/EBITDA (2026E) | 9.2x | 10.5x |
Relative to its peer group, Lazard trades at a discount on both P/E and EV/EBITDA multiples, suggesting undervaluation. Our 12-month price target of $68 represents a 20% upside from the current share price.
Risks
Key risks to our investment thesis include a prolonged slowdown in M&A activity, increased competition from bulge bracket banks and boutique advisory firms, and potential margin compression due to pricing pressure. Furthermore, macroeconomic risks, such as a recession or sustained inflationary pressures, could adversely impact both advisory and asset management businesses. Regulatory changes and geopolitical events also pose potential risks. We believe management’s proactive cost-cutting initiatives and strategic focus on high-growth areas within asset management partially mitigate these risks.
Recommendation
Based on our analysis, we initiate coverage on Lazard with a “Buy” rating and a 12-month price target of $68. We believe the current valuation offers a compelling entry point, considering the firm’s strong brand, growth prospects in asset management, and the anticipated recovery in M&A activity. While near-term headwinds persist, we are confident in Lazard’s ability to navigate the cyclical downturn and emerge stronger, delivering long-term value to shareholders. Key catalysts for share price appreciation include a rebound in M&A deal flow, continued AUM growth, and successful execution of the “Lazard 2030” strategic plan.
Citations:
- https://www.lazard.com/news-announcements/lazard-reports-first-quarter-2025-results/
- https://www.ainvest.com/news/lazard-set-announce-q2-h1-2025-financial-results-july-24-2025-2507/
- https://www.marketbeat.com/instant-alerts/filing-new-york-state-common-retirement-fund-lowers-holdings-in-lazard-inc-nyselaz-2025-07-19/
- https://lazardltd.gcs-web.com/news-releases/news-release-details/lazard-reports-first-quarter-2025-results
- https://www.gurufocus.com/news/2971603/lazard-laz-reports-increase-in-june-2025-assets-under-management–laz-stock-news
