By admin 
On Monday, Goldman Sachs upgraded Raymond James Financial Inc (NYSE:). stock from Neutral to Buy, setting a price target of $185.00. According to InvestingPro data, Raymond (NS:) James has demonstrated strong momentum with a 42.77% return over the past year and maintains a “GREAT” overall financial health score. The analyst’s optimism is grounded in the anticipation of mid-to-high single-digit gains to Raymond James’ fiscal year 2025-2027 earnings per share (EPS) estimates.
This forecast is based on two main factors: an expected rise in cash-related revenue growth in the second half of 2025 and into 2026, and a normalization in Capital Markets activity, particularly with a strong emphasis on U.S. and sponsor-based mergers and acquisitions (M&A) revenues, which are projected to see significant recovery.
The analyst also believes that the market has underestimated Raymond James’ operating leverage for the upcoming one to two years, with Goldman Sachs’ projections being approximately 100 basis points above the consensus on pre-tax margins.
Furthermore, Raymond James’ substantial excess capital, which is over $2.5 billion and represents 8%-9% of the company’s current market capitalization, is seen as providing considerable flexibility for the firm to potentially accelerate capital return to shareholders.
Goldman highlights that, when adjusting for excess capital, Raymond James’ stock trades at approximately 13 times the next twelve months’ (NTM) price-to-earnings (P/E) ratio based on Goldman Sachs’ estimates. This valuation is noted to be more than a 40% discount to the S&P 500’s P/E ratio, which currently stands at 22 times, compared to a historical discount range of 30-35%. The $185 price target is pegged at 14.5 times the estimated P/E for quarters five through eight.
In other recent news, Raymond James Financial disclosed a series of significant developments. The company reported an 11.1% increase in its quarterly dividend, a new share repurchase program, and record fourth-quarter revenues of $3.46 billion, driven predominantly by a surge in advisory revenue. TD Cowen, BofA Securities, and Citi all adjusted their price targets following these results, with TD Cowen maintaining a Hold rating, BofA reiterating a Buy rating, and Citi maintaining a Neutral rating.
Raymond James also announced an expected $5 billion in outflows in the first quarter due to the offboarding of an Office of Supervisory Jurisdiction. Despite this, BofA projects a 5-7% growth rate for net new assets in the following year. Looking ahead, Raymond James maintains a positive outlook for fiscal 2025, anticipating growth driven by increases in assets and fee-based accounts. These recent developments underline the company’s resilience and strategic foresight amidst challenging market conditions.
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