Is it safe to buy Lazard stock in 2023?

Lazard (NYSE: LAZ) stock price had a terrible performance in 2022 as the investment banking sector recoiled. The stock ended the year at $35, which was about 35% below the highest level in 2021. Its total market cap dropped to $2.9 billion. Other boutique investment banks like Houlihan Lokey, Moelis, and Evercore also plunged.

Investment bank woes

Lazard is one of the biggest boutique companies in the United States. The company provides its business through its financial advisory and asset management solutions. Its financial advisory business includes services like mergers and acquisitions, restructurings, capital structure and capital raising.

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Lazard suffered two main challenges in 2022. First, the M&A industry went through its biggest meltdowns in years. In total, the volume of M&A deals dropped to less than $2 trillion globally. Over 22,000 companies announced deals.

Second, Lazard suffered as its total assets under management slipped. Its financial reports showed that the company’s AUM dropped from $258 billion in January 2022 to about $221 billion in November. November’s figure was better than October’s $204 billion.

Still, the company, which is known for its intelligence men, did modestly well in 2022. In the most recent quarter, its operating revenue rose to $724 million while its operating revenue for the year to September dropped by just 3% to $2.1 billion. 

Its strong performance was helped by increased deal-making in Europe, where the firm advised several high-profile deals. It was offset by a decline in restructuring asset management. As I wrote in my article on Houlihan Lokey, Lazard could benefit as the demand for restructuring increase. In a recent statement, the firm’s CEO said:

“We are seeing an increase in client conversations pertaining to restructuring and liability management. The energy transition continues to drive deal activity in the sectors that are less influenced by the business cycle.”

Further, its total assets under management is rising, meaning that its asset management business is about to bottom. Remember, as I wrote elsewhere, Lazard has had similar dips before, such as during the Global Financial Crisis (GFC).

Lazard stock price forecast

The 4H chart shows that the Lazard share price has pulled back in the past few weeks. It has moved below the 25-day and 50-day moving averages. The two averages have even made a bearish crossover pattern. It has also moved below the important resistance point at $40.

Therefore, the LAZ stock price will likely continue falling in the first quarter and then resume the bullish trend after the Fed pivot starts.