Jefferies revenue misses estimate on weak fairness underwriting; eyes rebound later in 2025
By Lananh Nguyen and Niket Nishant
(Reuters) -Jefferies’ second-quarter revenue fell wanting estimates as fairness underwriting weak spot offset positive aspects from merger advisory charges, however the funding financial institution stated dealmaking might rebound later in 2025 because the financial outlook turns into clearer.
Uncertainty on account of U.S. coverage and geopolitical occasions slowed funding banking exercise within the first two months of the March-Could quarter, Jefferies stated on Wednesday.
Nevertheless, investor confidence has been recovering since Could and purchasers are actively discussing transaction alternatives, the financial institution added.
“There’s been a change during the last six to 10 weeks the place the uncertainty that prevailed has diminished considerably,” Jefferies President Brian Friedman stated in an interview.
“Traders, corporates and sponsors are prepared to make selections primarily based upon an expectation that there will not be materials detrimental impacts from both U.S. coverage selections or geopolitics.”
The outcomes spotlight how funding banks, as soon as anticipated to be among the many largest beneficiaries underneath President Donald Trump’s administration, are faring months into his second time period.
Hopes of a dealmaking revival had been dented by his tariffs, whereas market volatility prompted many corporations to delay capital-raising plans. Nevertheless, with Trump dialing again a few of his harsher threats, dealmakers are hopeful that the long-awaited increase may lastly be inside attain.
“That change in sentiment is driving far more dialog, many extra selections to proceed into the IPO market or the M&A market … and is lifting our backlog and prone to drive even higher leads to the third and fourth quarters,” Friedman stated.
Jefferies’ internet earnings attributable to frequent shareholders fell almost 40% to $88 million, or 40 cents per share, within the three months ended Could 31. Analysts on common had anticipated a revenue of 44 cents per share, in accordance with estimates compiled by LSEG.
The financial institution’s shares fell almost 2% in prolonged buying and selling.
Income from fairness underwriting halved to $122.4 million on account of market volatility, significantly within the first two months of the quarter. Debt underwriting income was flat.
In a brilliant spot, nevertheless, advisory income climbed 61% to $457.9 million because the financial institution continued to realize market share.
Income from the capital markets enterprise, which homes its buying and selling desks, dipped 0.4% to $704.2 million as decrease fixed-income income outweighed a stronger efficiency in equities.
The financial institution’s outcomes are intently scrutinized as they provide an early look into developments at Wall Road. Bigger rivals — JPMorgan Chase, Goldman Sachs and Morgan Stanley — are scheduled to report earnings subsequent month.
(Reporting by Lananh Nguyen in New York and Niket Nishant in Bengaluru; Enhancing by Maju Samuel)
