The industry-wide reduction in deal activity took a toll on the financials of investment banking and financial services company Jefferies Financial Group (NYSE:JEF). It posted earnings of $0.57 per share in the fourth quarter, down 53% year-over-year. Meanwhile, its net revenues declined by 18%. This decline reflects the slump in the IPO and leveraged finance markets due to rising interest rates and economic uncertainty. JEF stock fell about 2.52% in the after-hours trade.
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The decline in JEF’s top and bottom lines shouldn’t surprise much, as it was up against tough year-over-year comparisons. Further, the challenging macro environment was likely to hurt deal activities. While JEF’s EPS marked a significant decline, it came in line with the Street’s estimate. Further, JEF’s management highlighted that its investment banking revenues declined 38% year-over-year in Fiscal 2022. However, this was the second-best year for the corporation.
Also, its combined equities and fixed income net revenues fell 19% versus 2021 but came meaningfully ahead of the 20119 levels.
Is JEF a Good Stock to Buy?
While near-term macro weakness could pose challenges, JEF stock has recovered from the lows and gained over 36% in the past six months. Further, its growing market share across the majority of equity products and focus on returning substantial cash to its shareholders could act as catalysts. It has one Buy and one Hold recommendation on TipRanks. Further, these analysts’ average price target of $44.50 implies 17.88% upside potential.
TipRanks’ data shows that insiders sold JEF shares worth $21M in the last quarter. During the same period, hedge funds bought 731K shares of JEF. Nevertheless, JEF stock has a maximum Smart Score of “Perfect 10.” (Stay abreast of the best that TipRanks’ Smart Score has to offer.)
