Goldman Sachs Raised EPS Estimates for Legg Mason

In a report published earlier today, Goldman Sachs noted that Legg Mason LM beat their estimates for March assets under management with $677.6b compared to estimates of $669.3b. This was primarily due to better than expected fixed income flows and also better equity performance. Due to the increase in LM's March AUM, Goldman Sachs revised its 4Q2011 EPS estimates upwards from $0.44 to $0.45, with F2011, F2012, and F2013, going up from $1.63, $2.00, and $2.75 to $1.64, $2.04, and $2.77, respectively. However, total implied outflows for the quarter were still quite high at $14-15b, with fixed income flows finally turning in a positive $2b in March. Despite these upward revisions, Goldman Sachs remains neutral on LM due to the “accelerating outflows in equity strategies” being quite an emerging issue. As a result, Goldman Sachs has a twelve month price target of $35, noting that possible risks such as the “reacceleration of fixed income outflows” as potential impediments to reaching the target. LM is currently trading at $36.83.