Analyst Brennan Hawken of BMO Capital maintained a Hold rating on Jefferies, reducing the price target to $55.00.
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Brennan Hawken has given his Hold rating due to a combination of factors affecting Jefferies. The company’s shares have experienced significant pressure, partly due to broader market concerns and specific anxieties following their Investor Day. Although the Investor Day presentation offered limited new insights, the Q&A session provided some valuable information, indicating that business momentum remains stable despite recent stock volatility.
Hawken notes that while Jefferies is having a strong quarter, there are concerns about potential client and counterparty reactions to negative headlines. Additionally, the firm’s recruiting efforts are expected to decelerate, which could impact future growth. Despite these challenges, there is potential for strategic improvements, such as the likelihood of resuming stock buybacks and SMBC’s increased stake, which adds strategic flexibility. However, the lack of immediate catalysts and low near-term visibility contribute to the Hold rating, as the long-term prospects remain attractive but uncertain in the short term.
In another report released yesterday, Morgan Stanley also maintained a Hold rating on the stock with a $74.00 price target.