Goldman Sachs analysts upgraded Raymond James (NYSE:RJF) from Neutral to Buy, raising the price target to $185 on the stock. The upgrade reflects confidence in the company’s potential for earnings growth, operating leverage, and capital return flexibility over the next few years.
Raymond James is poised for a mid-to-high single-digit upside in fiscal 2025-2027 consensus EPS. Key drivers include a projected rebound in cash-related revenue growth in the second half of 2025 and into 2026, coupled with a normalization in capital markets activity. The firm’s strong positioning in U.S.-focused and sponsor-based M&A revenues places it in a favorable position to benefit from a recovery in these areas.
The market, according to the analysts, underestimates Raymond James’ operating leverage potential over the next one to two years, with pre-tax margins expected to outperform consensus estimates by approximately 100 basis points. Additionally, the company’s robust excess capital position—over $2.5 billion, equating to 8%-9% of its current market cap—provides ample flexibility to accelerate capital returns meaningfully.
From a valuation perspective, Raymond James is trading at 13 times next-12-month price-to-earnings (P/E) on adjusted estimates, representing a more than 40% discount to the S&P 500’s P/E of 22 times. This is a deeper discount compared to its historical average of 30%-35%, suggesting significant room for upward revaluation.