Estimating a 50% cut in M&A volume due to the coronavirus, Morgan Stanley analyst Manan Gosalia slashes estimates and price targets on Lazard (LAZ +0.0%), Moelis (MC +1.3%), and Evercore (EVR -0.0%).
Cuts estimates for midcap M&A advisers by a median of 53% for 2020 and 17% for 2021.
Risks are already baked into the shares, but volatility is likely to continue until clarity increases, Gosalia writes.
On the upside, restructuring activity may double as market stresses persist.
Besides the overall macro uncertainty and weaker CEO sentiment, sellers will likely await higher market valuations, curbs on travel will limit in-person meetings, and financing will likely cost more.
Price target cuts: LAZ to $28 from $39, MC to $31 from $37, and EVR to $66 from $97.