BofA Securities has adjusted its outlook for Raymond James (NYSE: RJF), lowering the firm's price target from $141.00 to $136.00 while still recommending the stock as a Buy.
The adjustment comes as the analyst revises downward the earnings per share (EPS) estimates for the fourth quarter of 2024 and the full years of 2025 and 2026.
The new EPS forecasts stand at $2.52, $10.73, and $12.41, respectively, marking a decrease from the previous predictions of $2.50, $10.99, and $12.79.
The lowered price objective reflects a recalibration due to a revised interest rate forecast and a slightly slower pace of bank migrations.
Despite the reduction, the analyst applies an 11 times multiple on the projected earnings for 2026. This valuation is within the historical trading range for Raymond James, which has been between 10 to 17 times earnings, contingent on the interest rate environment.
Raymond James reported a minor uptick in nominal sweep and Equity Sweep Product (ESP) balances compared to the previous month in its August monthly metrics.
Although definitive trends are yet to be established, the analyst anticipates that Raymond James could lead its peers in growing nominal balances, particularly due to their already low client cash balances as a percentage of Assets under Custody (AuC), which is 3.0% excluding ESP, and higher deposit costs.
In other recent news, Raymond James reported a record $3.23 billion in net revenues for fiscal Q3 2024, marking an 11% increase year-over-year, and a net income of $491 million. In leadership changes, Katherine H. Larson was appointed as the new Chief Accounting Officer, effective October 1, 2024.
Raymond James was also part of a $470 million settlement with U.S. regulators over recordkeeping violations. Analyst firms including Goldman Sachs, Citi, and JPMorgan have provided their assessments of the company's stock. Goldman Sachs maintained a neutral rating, while Citi reduced its price target to $125 from $132, and JPMorgan adjusted its target to $135 from $137, maintaining an Overweight rating.
InvestingPro Insights
To complement BofA Securities' analysis of Raymond James (NYSE:RJF), recent data from InvestingPro offers additional context for investors. As of the last twelve months ending Q3 2024, Raymond James reported a revenue of $12.32 billion, with a solid revenue growth of 9.51%. This growth aligns with the analyst's optimistic outlook on the company's future deal completions and potential market activity uptick.
InvestingPro Tips highlight Raymond James' financial stability and shareholder-friendly policies. The company has maintained dividend payments for 40 consecutive years, demonstrating a commitment to returning value to shareholders. This consistent dividend history could be particularly appealing to income-focused investors in the current economic climate.
Moreover, Raymond James' liquid assets exceed short-term obligations, indicating a strong balance sheet position. This financial strength could provide the company with flexibility to navigate the changing interest rate environment and potentially capitalize on growth opportunities as the market evolves.
For investors seeking a deeper understanding of Raymond James' financial position and growth prospects, InvestingPro offers 7 additional tips, which could provide valuable insights for decision-making in the context of the analyst's revised outlook and the company's recent performance metrics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.