Last Update 01 Dec 25
Fair value Decreased 0.38%RJF: Share Repurchases And Pipeline Momentum Will Drive Upside Into 2026
Raymond James Financial's analyst price target moved slightly lower to $183.80 from $184.50. Analysts factored in moderated revenue growth and higher discount rates, while optimism around improved organic growth, ongoing share repurchases, and positive business momentum helped offset these factors.
Analyst Commentary
Recent analyst updates for Raymond James Financial reflect a balance of optimism around the company’s growth trajectory and strategic execution, offset by cautious views about valuation and sector headwinds. Analyst actions included several upward price target revisions, new coverage initiations, and comments on business segment dynamics.
Bullish Takeaways- Bullish analysts are encouraged by the company’s ongoing share repurchase efforts. These efforts are helping maintain stable capital ratios and signal confidence in Raymond James' long-term growth strategy.
- Improved organic growth, especially within the Private Client Group, has been highlighted as a bright spot. This suggests positive momentum and effective client retention and acquisition strategies.
- Momentum across Raymond James’ business segments positions the company well heading into the next fiscal year. This is supported by healthy key indicators and a robust market environment.
- Recent quarterly results exceeding expectations, especially in transactional revenue and investment banking, point to strong execution. This further underpins upward revisions to price targets.
- Bearish analysts emphasize that current valuations are elevated, with limited clear catalysts for significant upside in the near term. This makes selectivity and disciplined growth critical.
- Some caution that the recent surge in capital markets activity, including capital raising and M&A, may be unsustainable. This could potentially temper future results as deal activity normalizes.
- Views on the company’s growth pace remain measured. Disciplined advisor recruitment supports earnings quality but contributes to slower growth compared to some peers.
- The combination of a more expensive entry point and the prospects of lower interest rates introduces near-term uncertainty, according to certain analysts. This diminishes the immediate appeal despite a generally constructive long-term view.
What's in the News
- Raymond James completed the repurchase of 2,107,000 shares for $350 million in the most recent tranche. This brings the total buyback to 7,418,996 shares valued at $1,101.6 million under the ongoing program announced in December 2024 (Key Developments).
- The company continues to seek acquisition opportunities that align with its culture and strategic goals. CEO Paul Shoukry has emphasized growth through both organic expansion and targeted acquisitions that offer attractive returns for shareholders (Key Developments).
- First National Bank of Sparta has chosen Raymond James' Financial Institutions Division to support Patton Wealth Management. This partnership broadens Raymond James’ presence in Illinois and adds approximately $261 million in client assets (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has fallen slightly, moving from $184.50 to $183.80.
- Discount Rate has increased marginally, rising from 8.46% to 8.60%.
- Revenue Growth projections have declined modestly, shifting from 9.37% to 9.20%.
- Net Profit Margin has improved slightly, increasing from 15.67% to 15.76%.
- Future P/E ratio expectation has dropped, moving from 14.81x to 14.16x.
Key Takeaways
- Successful recruitment and strategic focus on high-net-worth clients are expected to drive future revenue growth and strengthen long-term revenue streams.
- Investment in AI capabilities and strong loan growth may enhance operational efficiencies, improve net margins, and positively impact future earnings.
- Heightened market and interest rate uncertainties, competitive M&A landscapes, and tech investment risks could negatively affect revenue growth, profitability, and net margins.
Catalysts
About Raymond James Financial- A diversified financial services company, provides private client group, capital markets, asset management, banking, and other services to individuals, corporations, and municipalities in the United States, Canada, and Europe.
- Raymond James' successful recruiting of financial advisors with high trailing production and assets from other firms has bolstered client assets under administration, which is expected to drive future revenue growth through increased client assets and new business inflows.
- The establishment of a Chief AI Officer role highlights Raymond James' investment in artificial intelligence to enhance financial professional capabilities and client service, potentially improving net margins through increased operational efficiencies.
- The bank segment's strong loan growth, particularly in securities-based lending, coupled with high credit quality, suggests potential increases in net interest income and margins, contributing positively to future earnings.
- Consistent share repurchases, underpinned by strong capital and liquidity positions, indicate a commitment to enhancing shareholder value through EPS growth, alongside maintaining capacity for strategic acquisitions that align with cultural and financial goals.
- The strategic focus on providing comprehensive private investment alternatives to high-net-worth clients through a robust platform is poised to attract more high-value clients, potentially increasing fee-based revenues and strengthening long-term revenue streams.
Raymond James Financial Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Raymond James Financial's revenue will grow by 8.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 15.4% today to 15.7% in 3 years time.
- Analysts expect earnings to reach $2.7 billion (and earnings per share of $14.29) by about September 2028, up from $2.1 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.1x on those 2028 earnings, down from 15.5x today. This future PE is lower than the current PE for the US Capital Markets industry at 26.7x.
- Analysts expect the number of shares outstanding to decline by 2.28% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.39%, as per the Simply Wall St company report.
Raymond James Financial Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Heightened market uncertainty and volatility associated with tariff negotiations could negatively impact investment banking closings, leading to reduced revenue from this segment.
- Market and interest rate uncertainty pose challenges to the fixed income market, which could unfavorably impact brokerage revenues and related earnings.
- Increased client caution due to macroeconomic uncertainty may impact net new asset growth and thus lower overall revenue growth.
- Competitive M&A landscapes may pressure Raymond James to stretch on valuations, affecting profitability and capital allocation efficiency.
- The firm's commitment to significant investment in technology, such as AI, though potentially beneficial, presents risks around overspending without clear short-term financial returns, impacting net margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $173.273 for Raymond James Financial based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $17.3 billion, earnings will come to $2.7 billion, and it would be trading on a PE ratio of 15.1x, assuming you use a discount rate of 8.4%.
- Given the current share price of $165.59, the analyst price target of $173.27 is 4.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.