Florida-based Raymond James (RJF) is a multinational financial and investment services company, overseeing $1.18 trillion in client assets. Its clients are individuals, corporations and governments.
Raymond James recently agreed to acquire TriState Capital (TSC) for $1.1 billion in a cash and stock deal, which is expected to close in 2022. In another expansion move, the company agreed to acquire U.K.-based wealth management provider Charles Stanley for about $387 million. It expects to close the transaction in the fourth quarter of 2021.
Raymond James previously acquired NWPS Holdings, Financo and Cebile Capital.
With this in mind, let us look at the company’s latest financial performance and understand its newly added risks. (See Insiders’ Hot Stocks on TipRanks)
Q4 Financial Results
Raymond James’ revenues in the fourth Quarter of Fiscal Year 2021 jumped 30% year-over-year to $2.7 billion, exceeding the consensus estimate of $2.5 billion. The compant posted adjusted earnings of $2.06 per share, beating the consensus estimate of $1.71 per share. Revenue and adjusted EPS for the full year stood at $9.76 billion and $7.05, respectively. (See Raymond James Financial stock charts on TipRanks).
According to the new TipRanks’ Risk Factors tool, RJF’s main risk category is Finance & Corporate, which accounts for 39% of the total 31 risks identified for the stock. The company has recently added two new risks to its profile.
Under the Ability to Sell risk category, the company points out that it faces intense competition and that it may be unable to keep up with the technological disruption of its industry. The company says that some of its competitors have been able to significantly increase the geographic reach and capital base through consolidation. It also cites competition from fintech startups and cryptocurrencies. The company warns that it may need to spend more to keep up with the competition.
Under the Macro and Political risk factor, Raymond James cautions about the potential adverse impact of climate change on its business. It tells investors that extreme weather events may disrupt operations at its locations and prevent it from delivering the services that clients expect from it. The company also mentions that climate change may adversely affect the financial condition of its clients and result in revenue loss and loan defaults.
Additionally, Raymond James warns that it could suffer reputational damage because of serving clients involved in industries that exacerbate climate change. The company wants investors to know that new climate change regulations may increase its costs and adversely impact its business activities.
The Finance & Corporate risk factor’s sector average is at 59% compared to RJF’s 39%.
Recently, Morgan Stanley analyst Manan Gosalia reiterated a Buy rating on Raymond James Financial with a price target of $112. Gosalia’s price target suggests 14.51% upside potential.
Consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The average Raymond James Financial price target of $118.17 implies 20.82% upside potential to current levels.
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