Jefferies Financial Group Inc. JEF shares touched an all-time high of $82.04 on Monday. The stock has surged almost 27% since the U.S. presidential election on Nov. 5.

JEF stock has soared 102.3% this year, significantly outperforming the industry and the S&P 500 Index. It has also fared better than its peers – Morgan Stanley MS and Goldman Sachs GS.

Year-to-Date Price Performance
 

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Technical indicators also suggest strength for JEF. The stock is trading above its 50-day and 200-day moving averages.

50-Day & 200-Day Moving Averages
 

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This signals robust upward momentum and price stability for Jefferies. It underscores positive market sentiments and confidence in the company's financial health and prospects, which are expected to be driven by the revival of the investment banking (IB) business after more than two years. 

Global mergers and acquisitions (M&As) came to a grinding halt at the beginning of 2022, weighing on Jefferies’ IB business. The company’s total IB revenues plunged 37.9% in fiscal 2022 and 20.7% in fiscal 2023. Nonetheless, the trend is reversing of late. In the first nine months of fiscal 2024, the metric jumped 45.6%. 

Investment Banking Net Revenues
 

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Likewise, MS and GS are witnessing steady growth in their IB fees this year.

Factors Expected to Drive Jefferies Stock in 2025

After two years of aggressive interest rate hikes, the Federal Reserve has begun cutting rates. Since September, the central bank has lowered rates by 75 basis points (bps), and another 25-bp cut will likely be announced tomorrow. With more rate cuts expected in the near term, deal-making activities are expected to get a boost as it becomes cheaper for the corporates to borrow money. Further, solid economic growth will provide support.

Additionally, President-elect Donald Trump’s administration will likely be friendlier toward corporate consolidation and more leniency in approving merger deals is expected. This is likely to accelerate deal-making activities in 2025, including large-scale M&As. Hence, these factors will drive a solid IB performance and benefit Jefferies. At present, the company is one of the leading IB firms globally.

Further, volatility is likely to persist in the near term, resulting in higher client activity and trading volume. Jefferies is, thus, expected to gain from this, and its fixed income and equity trading revenues will increase further. In fiscal 2023 and the first three quarters of fiscal 2024, fixed income and equity trading revenues grew after witnessing a decline in fiscal 2022.

Jefferies’ joint ventures (JVs) and partnerships are likely to keep aiding its financials next year. Its JV with Massachusetts Mutual Life Insurance Company -- Jefferies Finance – faced a tough operating backdrop last year as demand for leveraged loans dipped. Nonetheless, with the central bank cutting rates, the demand is expected to tick up. Additionally, the company’s commercial real estate finance JV – Berkadia Commercial Holding LLC – with Berkshire Hathaway, Inc. has been witnessing solid performance. Berkadia, building a leading franchise in servicing, mortgage banking and investment sales, is ready to serve the multi-family market as financing and transactions normalize.

Jefferies and Japan’s Sumitomo Mitsui Financial Group, Inc. SMFG are strengthening their partnership to collaborate on corporate and IB deals. SMFG contributes its balance sheet and debt capital markets expertise, while Jefferies provides M&A advisory and equity financing services. Over the 12 months ending Sept. 30, 2024, they jointly worked on around 130 deals, a significant increase from 30 deals as of September 2023.

Bullish Analyst Sentiments for JEF

Over the past week, the Zacks Consensus Estimate for earnings of $2.92 for fiscal 2024 has remained unchanged, while for fiscal 2025, it has been revised upward to $4.79. 

Estimate Revision Trend
 

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Further, the projected figures imply a jump of 158.4% for fiscal 2024 and 63.9% for fiscal 2025.

Earnings Estimates
 

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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

Our Take on Jefferies Stock

Revival of the IB business, strategic JVs and partnerships to diversify operations and a strong balance sheet will aid JEF’s financials. Given the fundamental strength, optimistic analyst stance and favorable macroeconomic dynamics, the stock is a lucrative bet for investors despite touching an all-year high. Yet, one must keep an eye on the newly elected government’s policy decision regarding deregulations before making any investment decision.

Jefferies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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