Morgan Stanley Downgrades Jefferies with $49 Price Target, Flags Credit Concerns
Morgan Stanley downgraded Jefferies Financial Group from Overweight to Equal Weight and cut its price target to $49, implying roughly 28% upside potential, driven by credit concerns and anticipated advisory revenue softening. The stock has fallen nearly 38% year-to-date and trades below book value despite FY2025 investment banking net revenues rising 20% to $1.19 billion.
1. Morgan Stanley Downgrade and Rationale
Morgan Stanley lowered its rating on Jefferies Financial Group from Overweight to Equal Weight and cut the price target to $49, citing heightened credit concerns and expected softness in advisory revenues ahead of its upcoming quarterly report.
2. Jefferies Financial Performance
Jefferies shares have declined approximately 38% year-to-date following an 8.6% EPS miss in Q1 FY2026, with EPS of $0.85 versus a $0.93 estimate. In FY2025, investment banking net revenues rose 20% year-over-year to $1.19 billion and advisory revenues reached $634.2 million, yet the stock remains below its book value.