Nomura Initiates Coverage on Stifel

In a report published Thursday, Nomura analyst Steven Chubak initiated coverage on Stifel Financial (NYSE: SF) at Neutral, with a $46.00 price target.

According to the report, justifying a positive rating on Stifel shares is a struggle, as the revenue contribution from lower-multiple Institutional businesses continues to build and the valuation appears too rich trading above 17x consensus NTM earnings.

“However, management's plan to grow the bank could provide a meaningful boost to the bottom line, as lending activities produce much higher margins, and the potential upside here is not reflected in consensus forecasts (which our 2014E-15E EPS estimates are ~6% above),” the report noted.

Some highlights from the report included:

-”Given elevated short interest (7% of float and 15 days to cover), and Street numbers that appear too low, we caution shorts to tread lightly.” -FY13E EPS at $2.35. -FY14E EPS at $2.88.

SF closed Wednesday at $48.95.