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Rating Summary:
3 Buy, 11 Hold, 3 Sell
Rating Trend: = Flat
Today’s Overall Ratings:
Legg Mason Inc (NYSE: LM) moved higher Thursday after a Reuters report revealed potential interest from private equity firms. According to the report, talks were lead by money manager’s largest affiliates, Western Asset and Clearbridge. However, the board refused to entertain talks until it finds a new CEO.
Commenting on the developments, analyst Glenn Schorr of Nomura said it is highly unlikely that Legg Mason will be taken private. Schorr also expressed doubts about what type of value could be created by a spinout.
“Legg is already a highly leveraged asset manager with a gross debt-to-EBITDA of ~3.3x vs. peer average of ~1.3x. Given LM’s current market cap of ~$3.6B, we estimate an LBO would lever LM to a high debt level of ~6-7x. In addition, we believe Legg would still face the tough task of improving its flow trends which would be necessary to produce stable earnings. With high debt levels and weak fundamentals, we believe a buyout of LM is unlikely,” said Schorr.
Nomura Securities has a Neutral rating on Legg Mason (NYSE: LM) with a price target of $27.00.
For an analyst ratings summary and ratings history on Legg Mason click here. For more ratings news on Legg Mason click here.
Shares of Legg Mason closed at $26.84 yesterday, with a 52 week range of $22.36-$29.49.
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