Legg Mason Inc. is reporting an earnings increase of19 percent during its fiscal second quarter, but the news is not sweet to financial analysts.
Earnings grew from $121 million to $143.7 million during the same period last year, Legg Mason reported this week, with earnings per share at $1, up from 99 cents per share during the same period last year.
The company said its earning fell short of analysts? expectation because of its 2005 purchase of Citigroup Inc.?s money-management division. Legg Mason acquired the Citigroup division in a $3.7 billion deal that boosted the Baltimore-based company to the world?s fifth-largest money manager.
While earnings were below expectation, the mutual fund manager?s revenue grew from $466.4 million to $1.3 billion, meeting analysts? expectations.
AG Edwards analyst Jeffrey Hopson recommends a “hold” on Legg Mason stock, which matches the Zacks average brokerage recommendation. At midday Wednesday, Legg Mason stock was trading at $87.77, up 1.47 percent. Its 52-week high is $139.99, and its 52-week low is $81.01.
“To generate significantly higher sales, [Legg Mason] needs equity flow to pick up,” Hopson told Bloomberg, international news and analytical company.
Legg Mason?s chairman and chief executive, Raymond “Chip” Mason, turned attention to the company?s revenue growth as a positive sign for the future.
“While we were certainly disappointed by the results for the September quarter, we are encouraged by the fact that we entered the December quarter with higher levels of assets under management and a better equity market environment,” Mason told The Associated Press.
