On Tuesday, Oppenheimer maintained its Outperform rating on Jefferies Group (NYSE:JEF) and increased the stock price target to $54.00, up from the previous $52.00. The adjustment follows Jefferies Group's first-quarter earnings report on March 27, which revealed an earnings per share (EPS) of $0.66.
This figure includes certain one-time items, such as losses from discontinued operations at approximately $0.03 per share and a loss from an additional investment in an asset manager amounting to roughly $0.18 per share.
When these exceptional items are excluded, Jefferies Group's core operating EPS stands at $0.87, surpassing both the anticipated $0.76 and the consensus estimate of $0.75. This performance translates to a robust return on tangible equity (ROTE) of 12.0%.
The firm's total trading revenues reached $712 million, significantly higher than the estimated $607 million and showing a year-over-year increase of 9%. This growth is notably better than the expected mid-single-digit decline based on industry commentary from recent financial conferences.
Despite Jefferies Group's first fiscal quarter including December and not March, making it not perfectly comparable to its peers, the results still stand as a strong indication of the company's performance. The updated analysis from Oppenheimer reflects a new model and valuation target for the investment banking firm, taking into account the latest financial results.
The positive adjustment in Jefferies Group's price target and the reaffirmation of the Outperform rating by Oppenheimer suggest a favorable outlook for the company's stock. This perspective is based on the solid trading revenues and core operating results that Jefferies Group has reported for the first quarter of 2024.
InvestingPro Insights
Following the positive outlook from Oppenheimer, an analysis of Jefferies Group (NYSE:JEF) through InvestingPro provides additional context to the company's financial health and future prospects. With a market capitalization of $9.23 billion and a forward Price-to-Earnings (P/E) ratio of 32.41, Jefferies Group is trading at a premium compared to historical earnings.
Despite a slight decline in revenue over the last twelve months, the company's strong gross profit margin of 75.95% underscores its ability to maintain profitability.
InvestingPro Tips highlight Jefferies Group's expected net income growth this year and a commendable track record of dividend payments for 15 consecutive years, currently yielding 2.76%.
These factors, combined with a robust 42.1% one-year price total return, paint a picture of a company that has rewarded investors over the long term. Analysts also predict that Jefferies will be profitable this year, which is consistent with the company's performance over the last twelve months.
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