Another potential plus from the deal, according to Goldman, is that Raymond James’ advisors are “10 percent to 12 percent more productive” than those at Morgan Keegan. If Raymond James can make up even half that difference using its “superior distribution platform,” it would improve earnings by an additional one percent above Goldman’s (above consensus) estimates.
Putting aside the acquisition, Goldman sees favorable trends for Raymond James’ legacy business, including a better recruiting environment for financial advisors, “a growing population of retirees, and strengthening distribution economics.” Goldman rates Raymond James a “buy,” with a $40 price target. Shares closed Thursday at $32.99.
Less enthusiastic about Raymond James are analysts at Sandler O’Neill, which rates the stock a “hold,” with a price target of $37. While Sandler analysts “expect the stock to be a relatively steady performer in the group,” they argue that “many of the firm’s financial services peers are trading at what we view as more dislocated multiples,” according to a report published Thursday.
—By TheStreet.com’s Dan Freed
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