Raymond James (NYSE:RJF) Reports Tough Trading, Probably Municipals

In what will probably become one of the major financial stories of 2011, Raymond James (NYSE:RJF) reported tough trading in their latest quarter, and the presumption is it's in relationship to municipal bonds, as others have also reported struggling in that segment of the market.

Ticonderoga said, "Results all in seemed solid, with banking showing strength as well as fees/commissions. Not surprisingly, RJF talked about tough trading. We suspect this is related to municipals. We are modeling trading of just $3 million now for the quarter, down from $10 million earlier. This reduces EPS $0.02 but is picked up in adjustments to banking and provision expense.

"Solid Outlook, But Stock Is Starting to Reflect That a Bit More. RJF is now trading at 1.7x next quarter book value and 1.66x Q2 book value. The outlook remains constructive for the company, but a pause would not surprise us given the recent rally."

Ticonderoga maintains a "Buy" on Raymond James, which last closed at $33.21, down $0.01, or 0.03 percent. Ticonderoga has a price target of $35 on them.