Analyst Note| Michael Wong, CFA, CPA |
Compared with more pure-play investment banks, Raymond James’s revenue and earnings will hold up better from a combination of acquisitions, interest rates, and a relatively large wealth management business. The company reported net income of $323 million, or $1.52 per diluted share, on $2.7 billion of net revenue. Net revenue increased 13% from a year ago, primarily from higher client assets and asset management revenue, but sequentially decreased 4%, primarily from a 45% decline in investment banking revenue. Net income decreased 9% from the previous year and 28% sequentially with much of the decline related to the company’s capital markets business. We don’t anticipate making a significant change to our $99 fair value estimate for no-moat Raymond James.