Goldman Sachs Downgrades Stifel Financial (SF) to Sell, Sees Continued Top-Line Margin Headwinds

On Monday, Goldman Sachs downgraded Stifel Financial (NYSE: SF) from Neutral to Sell with a price target of $28.00 (from $29.00).

"We believe the Street is too optimistic on SF's near-term EPS growth trajectory, as consensus implies +30% yoy EPS from in 2013," the analyst said. "We view this result as unlikely absent a sharp recovery in volumes or retail investor risk appetite. Moreover, management’s preference is to continue investing for growth, and we think margin expansion assumptions (+200 bps in 2013 vs 2012) baked into Street estimates are unrealistic given limited revenue offset to incremental expenses. Furthermore, the stock trades at a 20% premium to its closest peer RJF (14.5X our 2013 P/E versus RJF at 12.2X), which we think is unwarranted given SF's continued margin headwinds and a more activity-driven business model."

For an analyst ratings summary and ratings history on Stifel Financial click here. For more ratings news on Stifel Financial click here.

Shares of Stifel Financial closed at $32.15 yesterday.

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