After Dynegy (NYSE:DYN) decided to end their deal with Blackstone (NYSE:BX), Greenhill's (NYSE:GHL) backlog was weakend, although news they were hired by the Treasury Department to consult them on getting rid of their stake in AIG helped them a lot.
Ticonderoga said, "This morning, Dynegy announced its decision to terminate its pact with Blackstone and seek other offers. GHL was advising Dynegy and may continue to do so, but the deal was an estimated 18% of the backlog. Excluding the Dynegy deal, we estimate the backlog coverage ratio (est. fees from the current backlog/our forward 3Q revenue est.) drops to roughly 30% from 36%; this compares to 87% for Lazard (NYSE:LAZ) and 80% for Evercore (NYSE:EVR).
"While there is still time for GHL to build the backlog, consensus 2011 EPS estimates call for a 97% increase vs. 2010. This compares to 26% for LAZ and 77% for EVR. If we do not see a material improvement in deal activity over the next few months, we would expect 2011 EPS estimates to be negatively impacted."
Greenhill closed Tuesday at $75.57, falling $0.38, or 0.50 percent. Ticonderoga maintains a "Neutral" rating on them.
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