Morgan Stanley has upgraded Moelis & Company from Underweight to Overweight, setting a new price target of $68, a notable increase from its previous target of $42. This upgrade reflects a significant shift in outlook, fueled by Moelis’ record deal pipeline and strategic push into private funds advisory.
🏛️ At the recent U.S. Financials Conference, Moelis disclosed an unprecedented surge in its deal pipeline, which has only strengthened since April. The company remains confident that this momentum will lead to a wave of completed transactions, regardless of potential interest rate changes. Backing this optimism is a 45.14% year-over-year revenue increase and a healthy current ratio of 2.19.
📈 Morgan Stanley anticipates a substantial improvement in Moelis’ compensation ratio, from 69% in Q1 2025 to 63% by 2026. This operational efficiency, paired with revenue growth, is expected to drive a 74% increase in earnings per share in 2026 compared to 2025, and a 91% jump versus 2024.
🏛️ A key element of Moelis’ growth strategy is its expansion into Private Funds Advisory (PFA), led by new hire Matt Wesley from Jefferies. The focus will initially be on continuation funds, with plans to diversify into dividend recapitalizations, limited partner stake sales, and fundraising initiatives.
📈 For dividend-focused investors, Moelis offers a 4.6% dividend yield and boasts a 12-year track record of uninterrupted dividend payments. With a current P/E ratio of 23.42, Moelis stands out as an attractive option for income portfolios.
In short, the combination of an expanding deal pipeline, strategic business growth, and solid financial performance underpins Morgan Stanley’s upgraded view, signaling strong future prospects for Moelis & Company.