Jefferies Q4 Margins Disappoint, Analyst Sees It As Top Market Rebound Bet

Jefferies Financial Group Inc JEF delivered mixed fourth-quarter results after Wednesday’s closing bell, with earnings falling short of expectations but analysts highlighting the company's strong position to benefit from a capital markets recovery.

The company delivered a "modest miss" in earnings of 93 cents per share versus the consensus of 98 cents per share, mainly due to softer-than-expected margins and a lower-quality revenue mix, according to Goldman Sachs.

The Jefferies Financial Group Analyst: Analyst James Yaro maintained a Buy rating for Jefferies Financial Group, while raising the price target to $87.

The Jefferies Financial Group Thesis: The company's core pre-tax margins missed Street expectations by 215 basis points, Yaro said in the note.

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While Jefferies Financial Group's core revenues were broadly in line with expectations, the revenue mix was "somewhat skewed to areas with a lower multiple," the analyst stated. The company's high-quality investment banking arm delivered a revenue miss of 9%, he added.

Despite the softer earnings, Jefferies Financial Group is "one of the best places to play the capital markets recovery, given ongoing share gains in recent years, and relatively attractive valuation," Yaro further wrote.

JEF Price Action: Shares of Jefferies Financial Group finished 0.69% higher at $80.13 on Wednesday.

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