Updated includes additional earnings estimates and price targets. NEW YORK ( TheStreet) -- It's not a zero sum game on Wall Street anymore. As the first quarter of 2012 draws to a close, some investment banking businesses are booming, while others haven't regained momentum after a second half swoon to 2011. First quarter 2012 earnings are set to reflect a continued M&A lull and analysts are beginning to cut estimates for boutique advisory businesses that specialize in providing deal advice. Investment banks with global trading businesses, on the other hand, are set to see a bond trading based surge that will help the industry recover from stress tests, regulatory reform and recent highly provocative Op-Ed pieces about the industry's morals.
Since the crisis, debt underwriting has been a key to earnings in some quarters for the likes of Goldman Sachs ( GS), Morgan Stanley ( MS) and JPMorgan Chase ( JPM). On the heels of a European Central Bank-driven refinancing boom across the Atlantic and a flurry of U.S. corporations looking to issue bonds at low interest rates, the debt markets have boomed, with analysts raising their earnings estimates of top investment banks. According to Bloomberg compilations of first quarter earnings estimates, analysts have spent the last 4 weeks upping revenue and profitability targets at Goldman Sachs, JPMorgan and Morgan Stanley. But a rising debt tide hasn't lifted all boats on Wall Street. At this time last year, merger activity was just beginning to hit its quickest post-crisis time stride, with companies using cash piles and low valuations to cut deals. After that activity slowed on renewed fears of a credit crunch beginning in August, dealmakers have yet to regain their step. A lack of merger activity now looks to be a headwind for "boutique" advisory leader Lazard ( LAZ ) according to analysts, with the potential for a re-rating of expectations for competitors like Evercore Partners ( EVR ) and Greenhill ( GHL). On Thursday, Bank of America Merrill Lynch analyst Guy Moszkowski downgraded Lazard shares to "underperform," cutting the top M&A "boutique's" price target from $28 to $26. "While we still believe that Lazard's marquee Advisory franchise will generate strong margins at some point, the legacy compensation drag, combined with still middling M&A activity, suggest that recent rally is overdone, as consensus estimates will need to fall further, in our view," wrote Moszkowski. It's a signal that M&A expectations may have outrun reality as record levels of corporate cash haven't fully put C-suite executives in an acquisition mindset.