Shares of Moelis & Co. are advancing 3.6% in Tuesday’s pre-market trading session after the investment bank announced a 50% increase in its quarterly dividend.
Moelis (MC) declared a quarterly dividend of $0.3825 per share, representing an increase of 50% from the second quarter. The dividend will be paid on Nov. 30 to common stockholders of record on Nov. 6. The firm offers advisory services to corporations, financial sponsors, and governments. Advisory services include recapitalizations and restructurings as well as mergers and acquisitions.
The dividend announcement comes as the investment bank reported a 10% year-on-year decline in third-quarter revenues, which landed at $207.6 million, primarily due to fewer M&A transaction completions. On an adjusted basis, the firm posted net income of $39.1 million, or $0.54 per share during the reported period, down from $51.7 million, or $0.76 per share in the year-earlier period.
“We started to see a resurgence in our M&A activity over the summer, and the pace of transaction announcements and momentum in the business has only intensified since then,” said CEO Ken Moelis. “We achieved the strongest quarter of Restructuring related activity in our Firm’s history during the third quarter, and our ongoing mandates continue to remain elevated.”
As of Sept. 30, Moelis held cash and liquid investments of $266.3 million and had no debt or goodwill on its balance sheet, it said.
Shares in Moelis have appreciated 12% over the past month, taking this year’s gain to 22%. (See Moelis stock analysis on TipRanks)
Ahead of the 3Q earnings, KBW analyst Michael Brown last month downgraded the stock to Hold from Buy with a $40 price target due to valuation. Meanwhile, Brown noted that he still sees a “very healthy backdrop” for deal-making across a wide range of industries.
The rest of the Street is sidelined on the stock. The Hold analyst consensus breaks down into 4 recent Hold ratings, 1 Sell rating and 1 Buy rating. Following this year’s rally, the $36.50 average analyst price target now implies 4.5% downside potential.
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