What happened

Piper Sandler Companies (NYSE: PIPR) surged in May, with its stock price rising 14.6% during the month, according to data provided by S&P Global Market Intelligence.

The investment bank outperformed benchmarks as S&P500 was essentially flat in May, up 0.2%, while Nasdaq Compound was down 1.9%. Despite the rebound, Piper Sandler is still down 29% year-to-date.

Image source: Getty Images.

So what

The Minneapolis-based investment bank got a nice bump last month with the April 29 release of its first-quarter earnings report, which easily beat estimates. Adjusted earnings per share, which excludes acquisition costs and other one-time items, was $3.12 per share, beating estimates of $2.80 per share, while revenue was $353 million, down 18% year over year, but beating estimates.

Consulting services accounted for the bulk of revenue, up 38% to $211 million in the quarter. It was the strongest first quarter on record for this segment, with Piper Sandler advising on four of the top five US bank mergers and savings deals. Additionally, its institutional brokerage business generated revenue of $105 million, down 4% year-over-year but up 13% from the prior quarter. These gains were offset by a sharp decline in corporate finance revenue, which fell 83% to $19 million. This decline reflects an overall slowdown due to market volatility, falling valuations and economic and geopolitical concerns.

Additionally, the market reacted favorably to the announcement that the company will repurchase up to $150 million of company stock through December 31, 2024. This is in addition to the existing stock buyback program, in effective January 1, 2022, which still has $43 million in shares remaining to be redeemed by the end of 2023.

Now what

There are a few things to consider for Piper Sandler in the coming quarters. First, the company bolstered its restructuring team with the hiring of a new chief executive, Mike Genereux, in its New York office. The move reflects the expected growth in restructuring deals for the company as more companies look for ways to navigate this market.

The company also expects pent-up demand for corporate finance, particularly in the healthcare sector, over the coming quarters as this market emerges from this period of uncertainty. Of course, when that remains to be seen, as the recession remains a concern and geopolitical risk persists.

10 stocks we like better than Piper Sandler Companies
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*

They just revealed what they think are the ten best stocks investors can buy right now…and Piper Sandler Companies wasn’t one of them! That’s right – they think these 10 stocks are even better buys.

View all 10 stocks

* Equity Advisor Returns as of April 27, 2022

Dave Kovaleski has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.