Analyst Note| Michael Wong, CFA, CPA |
We are increasing our fair value estimate for no-moat Stifel Financial to $64 per share from $52. Our fair value estimate implies an adjusted forward price/earnings multiple of about 10.5 times and a price/book ratio of 1.7 times. Of the $12 increase in our fair value estimate, $2 is from earnings since our previous valuation update, $3.50 is for higher client assets and asset management revenue, $2 is for higher deposits and net interest income, $1.50 is for higher investment banking and trading revenue, and $5 is from increasing long-run operating margins by 1 percentage point. These increases were offset by $2 of miscellaneous adjustments, such as forecasting a slightly higher corporate tax rate and increased capital expenditures.