Citi has increased its price target on shares of Raymond James (NYSE: RJF) to $145 from $125, while maintaining a Neutral rating on the stock.
The firm's decision follows Raymond James' reported adjusted earnings per share (EPS) of $2.95, surpassing both Citi's estimate and the consensus estimate, which were $2.39 and $2.41, respectively.
The earnings beat was attributed primarily to higher-than-anticipated net revenue, which came in at $3.46 billion against Citi's estimate of $3.32 billion. This increase was largely due to a significant rise in advisory revenue, which reached $205 million, doubling Citi's estimated $105 million.
Another contributing factor was a more favorable compensation to revenue ratio, reported at 62.4% compared to the estimated 64.2%, thanks to the stronger top line.
Additionally, Raymond James' adjusted non-compensation expenses were $521 million, slightly above the $513 million estimated by Citi. The company also benefitted from a lower effective tax rate of 20.8%, compared to the estimated 24%, which added approximately $0.12 to the EPS versus the estimate.
In other recent news, Raymond James Financial (NYSE:RJF) posted record fourth-quarter net revenues of $3.46 billion, accompanied by a net income of $601 million. The firm's earnings per diluted share stood at $2.86, while the adjusted net income was $621 million or $2.95 per diluted share. The Private Client Group contributed significantly to this success, generating record quarterly net revenues of $2.48 billion.
In addition, Raymond James saw total client assets reach a record $1.57 trillion, with substantial net new assets of $60.7 billion domestically for the year. The firm's share repurchase activity remained robust, with 2.6 million shares repurchased for $300 million in the quarter. Looking ahead, Raymond James maintains an optimistic outlook for fiscal 2025, expecting growth driven by increases in assets and fee-based accounts.
The Capital Markets segment also anticipates continued improvement in M&A activity. Despite a decline in domestic cash sweep balances and a fall in the bank segment's net interest margin, M&A revenues significantly boosted fourth-quarter results.
InvestingPro Insights
Raymond James' strong quarterly performance, as highlighted by Citi, is further supported by recent InvestingPro data and tips. The company's market cap stands at $29.49 billion, with a P/E ratio of 13.73, indicating a relatively attractive valuation despite its recent stock price surge.
InvestingPro Tips reveal that Raymond James has maintained dividend payments for 40 consecutive years, showcasing its financial stability and commitment to shareholder returns. This is particularly noteworthy given the company's strong recent performance and Citi's increased price target.
The company's revenue growth of 9.51% over the last twelve months and 12.32% in the most recent quarter aligns with Citi's observations of robust investment banking results and strong recruiting and asset growth trends. Additionally, Raymond James' gross profit margin of 93.42% underscores its operational efficiency.
An InvestingPro Tip also points out that Raymond James is trading near its 52-week high, with a one-year price total return of 47.27%. This performance, coupled with Citi's increased price target, suggests continued investor confidence in the company's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Raymond James, providing deeper insights into the company's financial health and market position.
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