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KBW upgrades Raymond James, sees growth trends continuing

Keefe Bruyette and Woods analyst Ann Dai upgraded Raymond James Financial Inc. to "outperform" on the expectation that key segments will see continued growth.

She noted that higher multiple segments of the business, including the company's bank, have been generating bigger revenues in recent years. This trend will likely continue in 2018 as positive adviser recruitment and a shift to a fee-based advisory model drive help to further growth.

Dai wrote that acceleration of assets under administration into fee-based advisory has resulted in better-than-anticipated net flows for asset management in recent years. Combined with the contribution of the Scout and Reams acqusition, she continues to see strong growth in the asset management segment.

The analyst also stated that a recent sell-off in Raymond James shares was influenced by broader exchange-traded funds and financials-specific ETF outflows in response to the market sell-off and volatility.

Dai's EPS estimates for 2018 and 2019 are $6.78 and $7.70, respectively.