Quick Take on 2Q26 Earnings Result: A Longer J-Curve Than We Expected

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Quick Take on 2Q26 Earnings Result: A Longer J-Curve Than We Expected

UpdateMannounced Campbell Lutyens acquisition, LAZ resumed buybacks of $50M in

2Q26 (vs. estimate of $4M). Management expects to continue buying back

stock throughout the year, with the current repurchase authorization at just

over $250M. LAZ was clear that the resumption of buybacks does not

preclude inorganic investments (w/ active evaluation of opportunities

ongoing), with the pace of buybacks still at a modest level versus history. We

increase buybacks in our model to $42M/$37M in 3Q26/4Q26 (vs. ~$5M per

quarter prior), while not yet at a pace to offset dilution.

Exhibit 1: LAZ projects 2H vs. 1H growth in total firm revenue to be 'somewhat

more pronounced' than usual. We calculate the median 2H vs. 1H intra-year

growth over the last 20 years at 13%; we model 2H26 revenue up 28% versus

1H26.

LAZ Total Revenue: 1H →2H Growth

Median for Years w/ Positive Growth

50%

40%

28%

% 30%

20% Growth

→2H 10% 13%

1H 0%

-10%

-20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026E

Year

Note: Historical median refers to years 2006 through 2025; Source: Company data, Morgan Stanley Research estimates

What We Changed: Lowering 2026 EPS by -45c (18%) to $2.12, mainly on higher

comp and noncomp expenses, partially offset by higher Financial Advisory and Asset

Management revenue. We now model a comp ratio of 67.6% in 2026 (vs. 65.5%

prior). Lowering 2027 EPS by -28c (6%) to $4.38, mainly on lower Advisory revenue

and higher noncomp expenses, partially offset by lower comp expenses. No change

to 63.0% comp ratio estimate in 2027. Lowering PT by -$3 (6%) to $44, applying a

10x P/E multiple to 2027 EPS. Target multiple is unchanged.

"New vs Old" and "Actual vs.