Balanced View on Raymond James - Analyst Blog
03 Abril 2013 - 4:50AM
Zacks
On Apr 2, 2013, we maintained our Neutral recommendation on
Raymond James Financial, Inc. (RJF) based on its
inorganic growth prospects and meaningful capital deployment
actions. However, escalating expenses and a stringent regulatory
landscape remain the major causes of concern for this Zacks Rank #3
(Hold) stock.
Why the Neutral Stance?
Over the past 60 days, there was a marginal upward estimate
revision for 2013. Further, estimates for 2014 have slightly
improved over the same period.
The Zacks Consensus Estimate for fiscal second quarter 2013 is
pegged at 75 cents along with a revenue estimate of $1,114 million.
The company delivered better-than-expected fiscal first-quarter
earnings on the back of an augmented top line, partially offset by
higher expenses.
Further, focus on inorganic growth, history of boosting
shareholders’ value through meaningful capital deployment
activities along with a stable liquidity position are the positives
for Raymond James. The acquisitions of ClariVest Asset Management,
LLC, Morgan Keegan and MK Holding from Regions Financial
Corporation (RF) will considerably expand its brokerage
and capital markets operations. Going forward, Raymond James is
expected to pursue more acquisitions.
However, escalating operating expenses remain a major concern for
Raymond James. Increasing compensation costs along with a spurt in
acquisitions are expected to further elevate expenses, thus
pressurizing the bottom line. In addition, the company’s
profitability remains vulnerable to the stringent regulatory
landscape and absence of geographical diversification.
Other Stocks to Consider
Other banking stocks that are performing well and are worth
considering include Duff & Phelps Corporation
(DUF) and Knight Capital Group, Inc. (KCG). While
Duff & Phelps holds a Zacks Rank #1 (Strong Buy), Knight
Capital carries a Zacks Rank #2 (Buy).
DUFF&PHELPS CP (DUF): Free Stock Analysis Report
KNIGHT CAP GP (KCG): Free Stock Analysis Report
REGIONS FINL CP (RF): Free Stock Analysis Report
RAYMOND JAS FIN (RJF): Free Stock Analysis Report
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