Oppenheimer Reiterates Outperform on Leucadia National (LUK) as Jefferies Reports Strong 2Q

Oppenheimer reiterated an Outperform rating and $22.00 price target on Leucadia National (NYSE: LUK) as Jefferies reported strong operating results for 2Q16. The beat was driven by a combination of better than expected top line and better than expected compensation ratio. Total net income was $54M vs Oppenheimer's $25M estimate, but it was even more impressive on the pre-tax line at $103M vs. a $37M estimate.

Analyst Chris Kotowski commented, "Jefferies, LUK's largest subsidiary accounting for more than half the company's value, reported a good rebound in operating results for 2Q16 on June 21. Admittedly, this comes after a dreadful 1Q16 print, and the trajectory of "core" results is still somewhat muddled, but it was a solidly profitable quarter. We calculate a "core" ROTCE of ~5.3% for 2Q16, and our current estimates are for ~8% for 2017. While this is short of the 10% we envisioned when we initiated coverage, we don't think that 10% is out of the range of reasonable possibility. Further, we think the results in any case validate our assumption that Jefferies should be worth at least tangible book value, which was our prior assumption."

For an analyst ratings summary and ratings history on Leucadia National click here. For more ratings news on Leucadia National click here.

Shares of Leucadia National closed at $17.15 yesterday.

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