HOUSE_OVERSIGHT_014385.jpg
Extraction Summary
0
People
7
Organizations
2
Locations
1
Events
0
Relationships
5
Quotes
Document Information
Type:
Financial analysis report / conference presentation slide
File Size:
Summary
This document is a slide from a Bank of America Merrill Lynch presentation at the '2016 Future of Financials Conference' on November 17, 2016. It outlines financial analysis and price objectives for several firms, including Legg Mason, Morgan Stanley, and Regions Financial. Despite the prompt to analyze it as an Epstein-related document, the content itself has no explicit mention of Jeffrey Epstein or any known associates; its only potential connection is a 'HOUSE_OVERSIGHT' Bates stamp, indicating it was collected as part of a congressional investigation.
Organizations (7)
| Name | Type | Context |
|---|---|---|
| Bank of America Merrill Lynch |
Author/publisher of the financial analysis report.
|
|
| Legg Mason (LM) |
Subject of financial analysis with a $36 price objective.
|
|
| Morgan Stanley (MS) |
Subject of financial analysis with a $43 price objective.
|
|
| New York Community Bancorp (NYCB) |
Subject of financial analysis with a $17 price objective.
|
|
| Prosperity Bancshares Inc (PB) |
Subject of financial analysis with a $58 price objective.
|
|
| Regions Financial (RF) |
Subject of financial analysis with a $13 price objective.
|
|
| HOUSE_OVERSIGHT |
Implied congressional committee, as indicated by the Bates stamp 'HOUSE_OVERSIGHT_014385' on the document.
|
Timeline (1 events)
Key Quotes (5)
"Our $36 price objective is based on a target P/E multiple of 12x our calendar '17E, a discount to the group, given financial leverage, muted flows, and deal/integration risk."Source
HOUSE_OVERSIGHT_014385.jpg
Quote #1
"Our $43 PO is based on a target PB multiple of 1.3x our forward book value estimate..."Source
HOUSE_OVERSIGHT_014385.jpg
Quote #2
"Our price objective is $17 and we use a three factor valuation model equally weighing valuations using P/E, P/TBV and DCF models."Source
HOUSE_OVERSIGHT_014385.jpg
Quote #3
"We use a three-factor valuation framework (P/TBV, P/E, DCF) to arrive at our $58 price objective."Source
HOUSE_OVERSIGHT_014385.jpg
Quote #4
"We use a three-factor valuation framework (P/E, P/TBV, DCF) to arrive at our $13 price objective..."Source
HOUSE_OVERSIGHT_014385.jpg
Quote #5
Full Extracted Text
Complete text extracted from the document (3,671 characters)
performance, weak fundraising, principal investment and balance sheet risk, expansion
risk, key person and talent risk, competition, a unique corporate structure that limits
shareholder control, and share lock-ups that could weigh on the stock.
risk, key person and talent risk, competition, a unique corporate structure that limits
shareholder control, and share lock-ups that could weigh on the stock.
Legg Mason (LM)
Our $36 price objective is based on a target P/E multiple of 12x our calendar '17E, a
discount to the group, given financial leverage, muted flows, and deal/integration risk.
Downside risks to our price objective: an equity sell-off or weakening flows, which
would pressure AUM and revenues. A return to past under-performance at key affiliates
is also a risk for Legg, given its fragile recovery and brand issues. Given their affiliate
model there are integration risks. Upside risks to our price objective are better than
expected equity markets, performance, or flows, or an accretive acquisition.
Our $36 price objective is based on a target P/E multiple of 12x our calendar '17E, a
discount to the group, given financial leverage, muted flows, and deal/integration risk.
Downside risks to our price objective: an equity sell-off or weakening flows, which
would pressure AUM and revenues. A return to past under-performance at key affiliates
is also a risk for Legg, given its fragile recovery and brand issues. Given their affiliate
model there are integration risks. Upside risks to our price objective are better than
expected equity markets, performance, or flows, or an accretive acquisition.
Morgan Stanley (MS)
We value the brokers based on the relationship between ROE (return on equity) and PB
(price to book), which has a high historical correlation. Our $43 PO is based on a target
PB multiple of 1.3x our forward book value estimate, which is above our 2017E ROE of
roughly 8% as we add in higher interest rate expectations and loosening regulations into
our multiple.
We value the brokers based on the relationship between ROE (return on equity) and PB
(price to book), which has a high historical correlation. Our $43 PO is based on a target
PB multiple of 1.3x our forward book value estimate, which is above our 2017E ROE of
roughly 8% as we add in higher interest rate expectations and loosening regulations into
our multiple.
Risks are a weak economy, low rates for longer, a significant reduction in capital
markets activity, weak returns, another shock to the financial system, ongoing
competition and talent risk, tighter regulation, significantly higher capital requirements,
and ongoing litigation risks.
markets activity, weak returns, another shock to the financial system, ongoing
competition and talent risk, tighter regulation, significantly higher capital requirements,
and ongoing litigation risks.
New York Community Bancorp (NYCB)
Our price objective is $17 and we use a three factor valuation model equally weighing
valuations using P/E, P/TBV and DCF models. To arrive at our P/E valuation, we assign a
14x multiple to our blended '17e EPS or inline with the median of other CCAR banks
with $50-100bn in assets. To arrive at our P/TBV valuation we applied a 2.2x multiple to
our 2Q17E TBV, a premium to NY/Thrift and smid cap peers given NYCB's superior
return profile. We arrive at our DCF valuation using we assume a 2% terminal growth
rate and a WACC of 8%.
Our price objective is $17 and we use a three factor valuation model equally weighing
valuations using P/E, P/TBV and DCF models. To arrive at our P/E valuation, we assign a
14x multiple to our blended '17e EPS or inline with the median of other CCAR banks
with $50-100bn in assets. To arrive at our P/TBV valuation we applied a 2.2x multiple to
our 2Q17E TBV, a premium to NY/Thrift and smid cap peers given NYCB's superior
return profile. We arrive at our DCF valuation using we assume a 2% terminal growth
rate and a WACC of 8%.
Upside risks to our price objective are: 1) Change in SIFI threshold could drive a relief
rally, 2) Lower for longer rate backdrop, and 3) A period of heightened market volatility.
rally, 2) Lower for longer rate backdrop, and 3) A period of heightened market volatility.
Downside risks to our price objective are: 1) worse than expected impact on ROTE from
increased capital standards from obtaining the SIFI designation and 2) higher than
expected impact from increasing rates on funding cost.
increased capital standards from obtaining the SIFI designation and 2) higher than
expected impact from increasing rates on funding cost.
Prosperity Bancshares Inc (PB)
We use a three-factor valuation framework (P/TBV, P/E, DCF) to arrive at our $58 price
objective. We assign a 1.8x multiple to our 2Q17E TBV (40% weight) compared to 1.1x
median of TX peers. We believe the 0.7x premium to Texas peers is warranted given
PB's above average return on tangible equity (ROTE) profile. We place a 14x multiple on
2017E EPS, in line with historical P/E median (40% weight) net of accretable yield. Our
DCF valuation ((20% weight) suggests a fair value of $45. Our DCF assumes a terminal
growth rate of 3% and cost of capital of 9.9%.
We use a three-factor valuation framework (P/TBV, P/E, DCF) to arrive at our $58 price
objective. We assign a 1.8x multiple to our 2Q17E TBV (40% weight) compared to 1.1x
median of TX peers. We believe the 0.7x premium to Texas peers is warranted given
PB's above average return on tangible equity (ROTE) profile. We place a 14x multiple on
2017E EPS, in line with historical P/E median (40% weight) net of accretable yield. Our
DCF valuation ((20% weight) suggests a fair value of $45. Our DCF assumes a terminal
growth rate of 3% and cost of capital of 9.9%.
Risks to our price objective are worse than expected drop in the price of oil, better than
expected macro environment and increasing rates which offset the effects of lower oil
prices, or inability to close an M&A deal due to regulatory or capital constraints.
expected macro environment and increasing rates which offset the effects of lower oil
prices, or inability to close an M&A deal due to regulatory or capital constraints.
Regions Financial (RF)
We use a three-factor valuation framework (P/E, P/TBV, DCF) to arrive at our $13 price
objective and assign a 1.4x multiple to 2017E TBV and 14x multiple on 2017E EPS. Our
We use a three-factor valuation framework (P/E, P/TBV, DCF) to arrive at our $13 price
objective and assign a 1.4x multiple to 2017E TBV and 14x multiple on 2017E EPS. Our
Bank of America
Merrill Lynch
Merrill Lynch
2016 Future of Financials Conference | 17 November 2016 71
HOUSE_OVERSIGHT_014385
Discussion 0
No comments yet
Be the first to share your thoughts on this epstein document