In a recent report, analysts at MKM partners compared Stifel Financial Corp SF 0.66% and Piper Jaffray Companies PJC 0.35% and the different paths the two companies have taken in the past decade.
In the report, analysts tell “a tale of two companies.”
Stifel-Aggressive Growth Story
After beginning the last decade as a small regional brokerage firm, Stifel has aggressively grown its operations and made 12 targeted acquisitions along the way.
Analysts now describe Stifel as a diversified full-service securities firm with a nice balance of private and institutional clients.
Stifel is now eight times larger than it was a decade ago, and analysts believe that the growth has been relatively low-risk by industry standards. Stifel grew revenue by 14 percent in 2014, and institutional trading was up 7 percent for the year.
Analysts praise Stifel’s growth record and see strong management continuing to drive earnings growth in the future.
MKM has a Buy rating on Stifel and a $67 target for the stock.
Piper Jaffray- Shrinking And Specializing
A decade ago, Piper Jaffray was also a small regional firm with modest institutional equities activity. While Stifel has been buying up targets to expand its business, Piper has been shedding non-core aspects of its business.
In 2006, the company sold its regional retail brokerage franchise to UBS Group AG UBS 0.71%. The move was seen as a positive in the market, as Piper’s share price jumped when the deal was announced.
Ten years later, Piper Jaffray is now focused on its core competencies, and the company is actually smaller in size now than it was a decade ago.
Analysts see little growth ahead and minimal upside to the stock from current levels.
MKM has a Neutral rating on Piper Jaffray and a $60 target for the stock.
Read this article and all my other articles for free on Benzinga by clicking here
Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
