On Monday, Wolfe Research adjusted its stance on Raymond James (NYSE:RJF), moving the investment firm's stock rating from Outperform to Peer Perform. The shift comes after a period of notable performance for Raymond James, with its shares having increased significantly since an earlier upgrade more than three years ago.
The analyst from Wolfe Research praised Raymond James for its effective management and strong presence in the Wealth Management sector, acknowledging the company's consistent organic growth.
Raymond James' stock had seen a substantial rise of 97% since the previous upgrade in January 2021, outperforming the S&P 500's 56% increase and the S&P Financials' 51% gain during the same timeframe. This surge was attributed to solid execution, favorable market conditions, and strategic acquisitions, including a highly accretive deal with TriState Capital (TSC).
Despite the company's strong performance, Wolfe Research anticipates a slowdown in earnings per share (EPS) growth relative to its peers. Factors contributing to this outlook include sensitivity to short-term interest rates, emerging net new asset (NNA) challenges, and shifts within the company's operational structure. Additionally, the firm may face increased compensation expenses and has less exposure to capital markets activities, which could affect its growth prospects.
Wolfe Research's updated valuation suggests a modest 12% potential upside for Raymond James' shares, which underpins the decision to downgrade the stock to Peer Perform. This new rating reflects a more cautious expectation of the company's stock performance relative to the broader market and its industry peers.
The downgrade is a significant change in the firm's view of Raymond James' stock, following a strong rally after the previous upgrade and a 3:2 stock split that occurred on September 21.
Raymond James has been recognized for its robust track record and position in the Wealth Management industry, but Wolfe Research's current assessment indicates a more tempered outlook for the company's stock performance moving forward.
In other recent news, Raymond James Financial (NYSE:RJF) has been the focus of analyst attention and has reported record revenues. TD Cowen maintained its Hold rating on Raymond James and raised the share price target from $126.00 to $130.00, citing the company's consistent strategic direction and reaffirmed financial guidance. Meanwhile, Seaport Global Securities reiterated its Buy rating and a $139.00 price target, highlighting Raymond James' strong company culture and potential for growth.
On the financial front, Raymond James announced significant milestones for the fiscal second quarter of 2024, including record net revenues of $3.12 billion and a net income available to common shareholders of $474 million. Client assets reached a new high of $1.45 trillion, with the company's Private Client Group seeing an influx of high-quality advisors.
These are recent developments, and analysts from TD Cowen and Seaport Global have expressed their views based on this information. While the companies' analyses suggest a stable financial path for Raymond James, no conclusions or summaries are provided here. This article simply reports the facts without offering a comprehensive view of the company.
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