Tuesday, BofA Securities updated its outlook on Raymond James (NYSE:RJF), increasing the price target to $145 from $135 while maintaining a Buy rating on the shares. The firm cited the broker's robust organic growth and high free cash flow (FCF) conversion as key drivers behind the improved target.
Raymond James has demonstrated significant growth in Net New Assets (NNAs), recording an increase of 8.6% in 2022 and 7.1% in 2023. BofA Securities forecasts this growth to continue at a rate of 6-8% in the future. The firm's success is attributed to its competitive value proposition, which includes a comprehensive range of products and services, as well as a technology platform that allows it to compete effectively with wirehouses.
The broker's business model is noted for its diversification and high growth. BofA Securities highlights that Raymond James offers a similar suite of offerings as larger wirehouses but with greater independence and higher payouts for advisors. This strategic positioning is expected to contribute to the company's ongoing growth.
Furthermore, the analyst emphasizes Raymond James' disciplined approach to capital allocation, which has led to high free cash flow conversions. The company's investment strategy is focused on sustainable capital expenditure and technology spending, alongside a methodical selection of opportunities based on expected return on investment (ROI).
"We believe sustainable organic growth in tandem with overall marketbeta driven growth and sustained ROCA is ultimately a very powerful algorithm for outperformance over the long-term," said the analyst.
InvestingPro Insights
As Raymond James (NYSE:RJF) captures the attention of BofA Securities with an increased price target and a Buy rating, real-time metrics from InvestingPro provide further insights into the company's financial health and market performance. Raymond James boasts a solid market capitalization of $27.64 billion, reflecting its significant presence in the industry. The company's P/E ratio stands at a robust 13.01, indicating that investors are willing to pay a higher price for earnings, a testament to their confidence in the firm's profitability. Additionally, the revenue growth for the last twelve months as of Q1 2024 is reported at 8.36%, showcasing the company's ability to increase its earnings over time.
InvestingPro Tips further reveal that analysts have revised their earnings projections upwards for Raymond James, signaling optimism about the company's upcoming financial performance. Moreover, with 40 consecutive years of maintained dividend payments, investors can find a sense of reliability and commitment to shareholder returns. For those considering investing in Raymond James, there are 10 additional InvestingPro Tips available, providing a deeper analysis of the company's prospects. To take advantage of these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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