Jefferies Group (JEF) PT Lowered to $47 at Oppenheimer

Oppenheimer analyst Chris Kotowski lowered the price target on Jefferies Group (NYSE: JEF) to $47.00 (from $52.00) while maintaining a Outperform rating into Q1 results.

The analyst commented, "We expect JEF to report fiscal 1Q22 results on March 28th, and based on Dealogic data and guidance on trading revenues from other investment banks, we would expect 1Q EPS to come in slightly below our prior estimates. The revenue mix now looks to have M&A roughly in line and underwriting lighter than expected with trading revenue pretty close to our prior expectations. We have three exhibits in today's Company report: first, Dealogic US deal volumes conforming to JEF's December to February fiscal period show equity underwriting down 77% Y/Y, high yield down 65% but completed M&A up 6.5%. Second, the Dealogic revenue estimates with their historical capture rates (i.e. Dealogic estimates as a percent of actual) implies ~$722M of investment banking revenues, versus our prior $784M estimate. Third, going off BAC's guidance that 1Q22 trading revenues are similar to 2020's, up from 2019 but down meaningfully from 2021. This is more conservative than JPM's guidance of "down ~10% Y/Y," which would be a surprisingly good result."

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