Back to top

Image: Bigstock

Raymond James Ratings Affirmed by Moody's, Outlook Stable

Read MoreHide Full Article

Raymond James Financial, Inc.’s (RJF - Free Report) long-term issuer and senior unsecured ratings were affirmed by Moody's Investors Service, the rating services arm of Moody's Corporation (MCO - Free Report) , at “Baa1.” Moreover, the company’s outlook remained stable.

Reasons for Affirmation

The strength and stability of Raymond James' financial performance, further supported by the company’s diversified business mix and prudent financial policies, led to the ratings affirmation.

Further, the positive outlook reflected improved creditworthiness, robust earnings track record as well as strong capital and liquidity profile, which offered substantial strategic and financial flexibility.

Per Moody’s, the coronavirus pandemic impacting the economy and markets is likely to cause an unprecedented slowdown in economic activities in the first half of 2020, which will also erode Raymond James’ profitability and debt service metrics in the near term. Yet, the agency expects the company’s diversified revenue streams, flexible cost structure, and low leverage to recover the pre-tax margin to a level supporting the current ratings.  

Notably, Moody’s expects the economic impact of the coronavirus pandemic to subside in the second half of 2020 and into 2021, with support from fiscal and monetary policies.

Per Moody’s, Raymond James’ earnings diversification makes it less vulnerable to  the recent rate cuts, and the consequent impact on net interest income and fees earned on client cash deposits swept to third-party banks. However, market declines might impact non-interest income sources of revenues.

Factors That Might Trigger Change in Ratings

An upward ratings change can occur if the company is able to improve earnings on organic revenue growth and diversification benefits.

However, weakening in Raymond James’ profitability, with the adoption of aggressive financial policy, operational failure and failure in adapting recent regulatory environment, might exert downward rating pressure.

Shares of the company have lost around 21.6% in the last six months compared with the 19.1% decline recorded by the industry.



Raymond James currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Northrim BanCorp Inc (NRIM - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 90 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has lost around 29.7% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

First Western Financial, Inc. (MYFW - Free Report) current-year earnings estimate moved north in 90 days’ time. Further, the company’s shares have declined 17.2% over the past six months. At present, it sports a Zacks Rank of 1.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in