Lincoln International (LCLN) is positioned as a high-quality global investment bank with strong exposure to financial sponsor-led middle-market M&A and a growing presence in valuation and advisory services in private capital markets, Morgan Stanley said in a Sunday note.

Repeat private equity sponsor relationships drive much of its advisory activity, supporting recurring revenue, while its valuations & opinions business also contributes steady income from private credit valuation demand, the analysts said.

Lincoln's diversified revenue mix, with non-M&A businesses accounting for a rising share over the past decade, along with its expansion to more than 30 offices and strengthening position in sponsor-driven deal flow, was also highlighted in the report.

The analysts expect improving private market activity, including a recovery in M&A volumes and growth in private credit, to support earnings momentum, driven by integration of recent hiring and acquisitions and backed by strong backlog and structural demand in private capital markets.

Morgan Stanley initiated coverage of the stock with an equal weight rating and a price target of $27.

Shares of Lincoln International were down 4.4% in Monday trading.

Price: 23.75, Change: -1.09, Percent Change: -4.39