Analyst cuts Raymond James’ rating over “emerging risks”
A stock analyst over the weekend lowered his rating of Raymond James Financial Inc., citing a variety of concerns related to the short-term growth of its brokerage and wealth management business, where more than 8,000 financial advisors work.
Steven Chubak, managing director of Wolfe Research, reduced the firm’s rating to “peer perform” from “outperform,” in a research note that surveyed the wirehouse, regional brokerage and bank brokerage sectors just days before the large banks begin reporting second quarter earnings at the end of this week.
Trading at $118.18 per share a few minutes after noon on Monday, Raymond James shares, with the ticker RJF, are up 88.5% since January 2021, when Wolfe Research upgraded the company to “outperform.” In the research note, Chubak pointed to a general cooling down of the firm’s pace.
“RJF leadership has executed well since our Jan. 2021 upgrade, but following a period of outsized gains, we are wary of emerging risks given elevated short-end gearing, slowing [net new assets] and OSJ departures, and comp pressures,” Chubak wrote.
He also cited financial advisor “migration to less profitable channels” as another risk; the least profitable business line for the firm and most profitable for the financial advisor is the registered investment advisor channel. Raymond James, like its competitors, is trying to hang onto financial advisors seeking independent business ownership by beefing up its RIA offering.
A spokesperson for Raymond James declined to comment.
OSJ is industry shorthand for office of supervisory jurisdiction, a term used to describe a branch or large network of financial advisors affiliated with a broker-dealer like Raymond James Financial Services Inc., which works with
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