Raymond James RJF shares touched an all-time high of $164.33 on Monday. The stock has soared 11.6% since the U.S. presidential election on Nov. 5.

Over the past three months, RJF stock has jumped 41.4%, significantly outperforming the industry and the S&P 500 Index. It has also fared better than its peers – Morgan Stanley MS and Evercore EVR.

Three-Months Price Performance
 

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The primary reason for investors’ optimistic stance on Raymond James is the revival of the investment banking (IB) business after more than two years. Clarity on several macroeconomic matters, the higher chances of the soft landing of the U.S. economy and interest rate cuts globally are driving deal-making activities.

Is More Upside Left for RJF Stock?

Fed Rate Cuts & Outcome of the U.S. Presidential Election: After two years of aggressive interest rate hikes, the Federal Reserve has begun cutting rates. In September, the central bank lowered the rates by jumbo 50 basis points (bps) and followed this up with a 25-bp cut on Nov. 7. With more rate cuts expected in the near term, deal-making activities are likely to get a boost as it becomes cheaper for the corporates to borrow money. Further, solid economic growth will offer support.

Additionally, the incoming U.S. President Donald Trump’s administration is likely to be friendlier toward corporate consolidation as more leniency in approving merger deals is expected. Hence, this will drive a solid IB performance and benefit Raymond James. 

As global deal-making came to a grinding halt at the beginning of 2022, it weighed on RJF’s IB business. The company’s IB fees (in the Capital Markets segment) dipped 4% in fiscal 2022 and 41% in fiscal 2023. Nonetheless, the trend is reversing of late and in fiscal 2024, IB fees grew 7%. Likewise, MS and EVR are witnessing a steady rise in their IB fees. 

Raymond James will likely witness a solid improvement in IB fees in the upcoming period, driven by a healthy pipeline and active merger & acquisition (M&A) market. 

Strategic Acquisitions & Expansion: Raymond James has accomplished several opportunistic deals over the past years, which have helped expand into Europe and Canada. In fiscal 2023, the company acquired Canada-based Solus Trust Company Limited. In fiscal 2022, it acquired SumRidge Partners, TriState Capital Holdings and the U.K.-based Charles Stanley Group PLC. 

These deals, along with several past ones, have positioned RJF well for future growth. Management looks forward to actively growing through acquisitions to strengthen the Private Client Group and Asset Management segments. In May 2024, the company announced that it forayed into the lucrative private credit business through a partnership with Eldridge Industries.

Impressive Capital Distributions: RJF has a track record of regularly raising dividends over the last decade. The last dividend hike of 7.1% was announced in November 2023. The company increased its dividend five times in the past five years, and its payout has grown 18.06% over the same time. RJF's payout ratio currently sits at 18% of earnings.

In November 2023, the company authorized the repurchase of shares worth up to $1.5 billion, which replaced the previous authorization. As of Sept. 30, 2024, $645 million remained available under the buyback authorization. Given its robust capital position and lower dividend payout ratio compared with peers, Raymond James is expected to sustain efficient capital distributions.

Analyst Sentiments Bullish for RJF

Over the past week, the Zacks Consensus Estimate for earnings of $10.83 and $11.53 per share for fiscal 2025 and fiscal 2026, respectively, has been revised upward. 

Estimate Revision Trend
 

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Further, the projected figures imply growth of 7.8% for fiscal 2025 and 6.5% for fiscal 2026.

Earnings Estimates
 

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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

Final Words on Raymond James Stock

Revival of the IB business, organic and inorganic growth efforts to diversify operations and a strong balance sheet will aid RJF’s financials. Also, the newly elected governmental administration is expected to lead to more leniency in approving M&As. Hence, the company is expected to keep benefiting.

Thus, given the fundamental strength, optimistic analyst stance and favorable macroeconomic dynamics, RJF stock remains a lucrative bet for investors despite touching an all-year high.

Raymond James currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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