Lazard (NYSE:LAZ), Franklin Resources (NYSE:BEN), Morgan Stanley (NYSE:MS) Top Picks for Brokers & Asset Managers

In the Brokers & Asset Managers category, Ticonderoga Securities said their favorite picks are Lazard (NYSE:LAZ), Franklin Resources (NYSE:BEN) and Morgan Stanley (NYSE:MS).

Ticonderoga said, "LAZ Still Has Upside Potential; Raising Target to $45. LAZ continues to remain a top pick given the potential for earnings leverage stemming from balance sheet restructuring, more aggressive compensation management, and a generally favorable outlook for advisory businesses. We expect to hear more around these issues when the company reports in mid-January. We estimate that some element of balance sheet restructuring combined with improved compensation metrics could add anywhere from $0.20 to $0.40 to earnings, or the equivalent of $3.20 to $6.40 in share appreciation (based on the current multiple of 16x). Our revised price target is $45, or 18x our 2011 EPS estimate.

"BEN Remains Undervalued: Target $135. BEN remains our top AUM name. The decision not to pay a special dividend combined with industry bond outflows has created a “shoot first ask questions later” mentality in the stock. However, the sell-off in the stock affords an opportunity to repurchase shares at lower, more accretive levels. Second, the industry has experienced bond outflows, but global flows remain much more resilient. Global is where the bulk of BEN bond flows come from. In addition, we are confident BEN will participate meaningfully in an equity recovery, like it did in the last bull market. BEN’s average annual equity fund growth rate from 2005 through 2007 was 6.5%. With likely record market share today, we believe the potential exists for meaningful exchanges from bonds into equity products. Note that in the most recent quarter, the global bond category had a record $2.3 billion in exchanges.

"MS Slow and Steady Progress; Raising Target to $31. We believe MS has a chance to break out in 2011. While there is still plenty of work ahead, an improving economic landscape has positive implications for investment banking, particularly equity and M&A, where MS is historically stronger. In addition, rising rates generally translate well into greater commodity activity, most notably the energy complex, where MS maintains a leading position. Retail also benefits from rising rates. Any incremental news on capital also could serve shares well. Our revised price target is $31, or 1.1x estimated Q1 2011 tangible book value."

Lazard closed Monday at $39.67, up $0.18, or 0.46 percent. Franklin Resources closed at $113.17, up $1.96, or 1.76 percent. Morgan Stanley ended the session at $28.23, up $1.02, or 3.75 percent.