Ahead Of The Bell: Raymond James Financial

NEW YORK (AP) — An analyst on Thursday upgraded his view of Raymond James Financial Inc., saying the current share price accurately reflects the risks associated with potential bank credit losses at the financial-services firm.

Friedman, Billings, Ramsey & Co. analyst Steve Stelmach upgraded his view on Raymond James to "Market Perform" from "Underperform." He also increased his price target to $15 from $12 because he does not expect any significant decline to book value in the near future.

The stock's underperformance compared with its peers since FBR downgraded it has brought its valuation more in line with risks for credit losses at its banking unit, Stelmach wrote in a research note.

Aside from a bank segment that offers traditional consumer, commercial and residential loans and deposits, Raymond James also provides brokerage and investment-banking services.

With risk from the bank's performance now factored into the stock price, a further sharp decline in share price is unlikely, Stelmach said. The two scenarios that could potentially lead to a further decline, though, would likely only be the result of a general decline in equity markets or new capital demands at the St. Petersburg, Fla.-based bank, he added.

Stelmach said that under FBR's base loan-loss assumptions, Raymond James' bank would not need any additional capital. Under a worse scenario for deterioration in the economy, the bank would likely need about $100 million in additional capital, which should be available from the parent company, he wrote in the note.