NEW YORK (TheStreet) -- Greenhill & Co. (GHL) - Get Greenhill & Co., Inc. Report stock is down 5.55% to $36.11 in late morning trading on Thursday as MKM Partners lowered their price target to $40 from $47 and maintained a "neutral" rating.
Greenhill & Co. did not meet 4Q14 estimates, as MKM analysts anticipated a core revenue of $106.5 million in the fourth quarter, but the company's actual revenue was $76.65 million. Revenues were down 17% sequentially, while flat year-over year, analysts noted.
"The 4Q14 top-line miss was surprising given a seemingly favorable backdrop for mergers and acquisitions," the firm said. The 2014 Advisory revenue of $280.5 million was actually down 2% in comparison to 2013.
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Analysts question whether it was a random statistical variance and/or bad luck, or something more substantive in competitive dynamics.
MKM reduced their 2015 EPS estimate by 34 cents to $2, reflecting the lower revenue run-rate and momentum. Analysts lowered their estimate of the company's annual revenue to $334.2 million from $418.2 million.
Greenhill & Co. is an independent investment bank focused on providing financial advice on mergers, acquisitions, restructurings, financings and capital raising to corporations, partnerships, institutions and governments.
Separately, TheStreet Ratings team rates GREENHILL & CO INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GREENHILL & CO INC (GHL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GHL's very impressive revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues leaped by 106.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GREENHILL & CO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GREENHILL & CO INC increased its bottom line by earning $1.56 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.56).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 1005.3% when compared to the same quarter one year prior, rising from $1.80 million to $19.87 million.
- Net operating cash flow has significantly increased by 8130.37% to $32.52 million when compared to the same quarter last year. In addition, GREENHILL & CO INC has also vastly surpassed the industry average cash flow growth rate of -73.28%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market, GREENHILL & CO INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GHL Ratings Report