Wells Fargo Downgrades Stifel Financial (SF) to Underperform, Sees Integration Risk

Wells Fargo downgraded Stifel Financial (NYSE: SF) from Market Perform to Underperform and cuts estimates and its valuation range from $30-$35 to $23-$27. The firm cited KBW integration challenges and risks to Street EPS.

The firm comments, "We are downgrading our rating on SF shares to Underperform from Market Perform based on KBW integration challenges and risks to Street EPS. We lower our 2013E/ 2014E EPS to $2.10/$2.30 from $2.42/$2.80 prior which now fully incorporate the KBW deal. We see KBW being EPS neutral at best in 2013 and risks look high to us given cultural and organizational challenges in addition to prospects for revenue dilution. Our lower ests are mainly a function of much lower revenues we see for standalone SF given a still weak macro backdrop. Our valuation range goes to $23-27 (11-13x 2013E) from $30-35 prior which implies about 20% downside risk at the midpoint. We recommend the pair trade with Outperform-rated RJF (NYSE: RJF) ($36.81) given fewer business model risks and lower valuation."

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 $31.45 yesterday.

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