Legg Mason’s Flow Trends Mixed, Restructuring On Track

Analysts at Sterne Agee reiterate their "neutral" rating on Legg Mason Inc LM, while raising their estimates for the company. The target price for LM is set to $34. LM reported its Q1 earnings short of the estimates. Sterne Agee says, “Excluding closed end fund issuance costs and restructuring costs (which weren’t in our estimate) EPS would have been $0.38, $0.03 higher than our estimate. The strength was driven by higher than expected fund advisory fees reflecting a stronger average fee rate as well as a stronger distribution margin (ex. closed-end fund launch).” “Total net outflows of $23.1 billion were better than the outflows of $25.3 billion we modeled. The stronger than expected result reflects equity inflows of $700 million (first inflows in over 4 years) driven by the $1.3 billion closed-end fund launch…. However, management continues to point to a turnaround in fixed-income flows in the coming quarters. Liquidity outflows of $14.4 billion were roughly in line with the $15.1 billion of outflows we modeled,” the analysts mention. Sterne Agee has raised its EPS estimate for 2011 from $1.70 to $1.79. More Analyst Ratings here