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Five Financials That Benefit From Reform

Evercore Partners:

Evercore Partners (EVR - Get Report) is one of the most successful of the so-called advisory boutiques, a group that includes several privately-held companies like Centerview Partners and Moelis & Company, as well as publicly-traded names like Greenhill & Co. (GHL) and Lazard (LAZ) (though Lazard, which has more than 2,000 employees, gets annoyed when you call them a boutique).

These firms are comprised of investment banking stars who often come from big Wall Street banks like Goldman and Morgan Stanley, but quit because they want to give advice to CEOs rather than sell them products. At least that's their sales pitch.

The pitch should work better than ever these days, as revelations about, say, how Washington Mutual's former CEO Kerry Killinger was afraid to hire Goldman because he thought the firm's traders might exploit sensitive information that would hurt the lender. Many of the financial reforms being contemplated in Washington would weaken the big investment banking firms, which can only help their smaller competitors.

Evercore may have a special leg up because its Chairman, Roger Altman, is one of Wall Street's most prominent Democrats. Corporate CEOs, many of whom are Republicans, may want to enlist a guy like Altman to help make their case in Washington with the party that is running the show.

Shares of Evercore are up 12% year-to-date, but first-quarter results this week came in slightly short of Wall Street's consensus view, held back by expenses related to acquisitions and expansion. President and CEO Ralph Schlosstein (pictured above) touted more the company's progress toward strategic objectives -- such as increasing advisory capabilities in different sectors -- than its actual performance. William Blair & Co., which reiterated its outperform rating on the stock following the report, agreed and it sees further appreciation from here.

"We believe the stock can trade closer to 20 times our 2011 estimate over the next 12 months as the improvements in the overall M&A environment gain a firmer footing, and we expect significant earnings growth in 2012 as well," William Blair said.

-- Written by Dan Freed in New York.
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