Raymond James (NYSE:RJF) Q1 Could Get Hit Hard from Municipal Bond Sell-Off

While Raymond James (NYSE:RJF) looks solid in 2011, their first quarter could get rough from the sell-off in municipal bonds.

Ticonderoga says, "No Change To Quarter, Raising 2011 Marginally, Reiterate Buy. We are leaving our Q1 estimate unchanged at $0.52 per share. We are raising our fiscal 2011 to $2.23 from $2.18. The revision is reflective of a slightly lower average provision expense and higher fee-based revenue stemming from the market. Our average quarterly provision expense is now $19.7 million throughout 2011. We expect book value of $19.46 at quarter end, which implies an 11% ROE for the quarter.

"Not Much To Dislike. A rising equity market, potential for rising interest rates, improving credit quality, disciplined senior management, and structural positives for equities all continue to paint a bullish picture for RJF. While Q1 may feel the sting of the municipal bond sell-off, the underlying earnings outlook for the Company remains compelling."

Ticonderoga maintains a "Buy" rating on Raymond James, which closed Tuesday at $32.70, up $0.07, or 0.21 percent. Ticonderoga has a price target of $35 on Raymond.