In a sector where fluctuating rates often dictate profits, Raymond James Financial (NYSE: RJF) is showing some resilience, underpinned by a diversified profit model that's envied by many of its interest-rate dependent peers.
That's according to Bank of America Corp (NYSE: BAC) Global Securities, which is bullish on the stock.
The RJF Analyst: Mark McLaughlin initiated Raymond James at a Buy with a $122 price target.
The RJF Takeaways: Raymond James' diversified approach shines through in McLaughlin's Monday note to investors. The analyst said Raymond James is showing organic growth while nurturing its high assets under custody target adviser base. It's a strategy that beckons brokers who are veering away from the traditional wirehouses, seeking greater autonomy, but without compromising on the strength of tech and support.
Raymond James is well-prepared for any short-term liquidity needs as the firm held no more than 50% of deposits on its bank balance sheet during the zero-interest rate environment, Bank of America says. That sets them up to navigate the "higher for longer" interest rate environment.
The conservative approach is expected to pay dividends, McLaughlin said, especially with the possibility of broader net interest margins in the near horizon.
The capital markets and asset management divisions of RJF, although currently underperforming, carry the promise of revival, BofA said. With strategic investments, including a deeper dive into healthcare and the acquisition of tech-savvy SumRidge Partners, RJF seems poised for a bullish pivot once macro winds shift.
McLaughlin also pointed to potential pitfalls, saying the broker migrations to the RIA channel hurts growth prospects.
Bank of America expects strong value proposition for Raymond James, including a wide breadth of products, services, and a technology stack that advisors need in order to compete well with larger investment banks.
The firm can also provide individual attention and service levels that smaller IBDs show, Bank of America noted.
RJF Price Action: Shares of Raymond James Financial are trading 0.69% higher to $107.12, according to data from Benzinga Pro.