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Raymond James Equity Research employs more than 60 research analysts dedicated to providing insights and context that help investors connect the dots in key industries and across national borders, and make informed investment decisions. They cover approximately 1,200 companies in ten highly focused industries – consumer, energy, financial services, healthcare, industrial, mining, real estate, sustainability, technology and communications, and transportation – and collaborate to produce detailed supply chain surveys, reports and industry updates.
Please see below for brief overviews of some of our recent in-depth equity research reports. The full reports are available to clients via their financial advisor, institutional salesperson or other Raymond James representative. Institutional clients can access our equity research by logging in below. If you would like to learn more about becoming a client of Raymond James, please contact us. For all relevant equity research disclosure, visit the Disclosures and Definitions page.
Initiating coverage of athletic global brands: Looking for gains after some pain
Aside from obvious macro headwinds, there are industry-specific challenges, and we expect a challenging 2H22. Yet, we believe our top picks in athletic brands have meaningfully asymmetric risk/returns that favor upside over the long term as these are high-quality companies that can navigate a difficult near term without diminishing the potential to drive stronger growth beyond 2022.
What are institutional investors buying in energy? Five trends with 3Q filings
With the latest 13F and AMR ownership filings, we look at every fund that has owned at least one Canadian E&P name since 2018 to understand their collective buying and selling trends and what those likely mean going forward. Overall, we highlight five key themes on what institutional investors might look to invest in next.
Relaunching coverage of oilfield services against a strong macro backdrop
A sustained period of underinvestment during an exceptionally weak macro environment coupled with rising energy transition pressures have led to the current oil supply situation for which there is no short-term fix. Furthermore, capital discipline and asset rationalization across the oilfield service sector puts a lid on how quickly the industry could ramp back up. This portends a more bullish setup for a longer cycle with sustained free cash flow generation as limited new capacity provides for an extended period of strong margins.
Clean technology: Nice surprise from Congress creates a bounce, but sentiment remains mixed
As a general premise, the lofty hydrocarbon pricing around the world is bolstering the economic rationale for substitution into renewable and low-carbon solutions. Thus, we see nothing but strength on the demand side of the equation. That said, investor sentiment surrounding clean tech remains decidedly mixed, as a result of macro headwinds: lingering supply chain headwinds and recessionary fears running rampant amid the sharply increased interest rate of late.
Overall, our survey revealed a number of positive attributes. Inflation expectations (versus past surveys) seem to be slowing, M&A is still on the horizon, less debt repayment and more dividends, a bias toward higher oil prices (despite falling WTI prices), and overall, what still appears to be a healthy operating outlook.
Mortgage lenders’ valuations disconnected from positive outlook
We believe considerable concerns remain with regard to the potential impact of rising interest rates on the residential housing market in Canada. We tend to disagree and believe the industry is in a stable position compared to longer-term averages, with some companies in our coverage well positioned in the alternative segment of the residential housing market.
Financial indices 101
This report provides a comprehensive overview of financial index providers. With high barriers to entry, significant operating leverage and low capital requirements, the index business has become a high-margin foundation for many of the companies in our coverage universe.
Lumber won’t tap; upside despite recessionary assumptions
Despite assuming an outlook consistent with a housing and economic recession, our estimates still suggest very attractive valuations among our covered lumber companies. While building materials end users are currently very cautious – unwilling to buy beyond immediate needs – we expect this could support a typical seasonal commodity rally.
One way to view the Fed’s rate moves is that it has basically reset valuations of long duration assets around the world through the channel of higher rates, and the most positive expected real returns for risk-free assets since just after the global financial crisis. This is driving capital from around the world into the U.S. dollar, exacerbating inflation and economic outlooks outside the U.S., and extending a process where equity investors have to figure out both how low EPS has to go and what the right P/E is in a world with higher rates.
Managed care: Catalysts we should be watching
As the year nears its close and with many 2022 policy items behind us, we have started taking a closer look at upcoming catalysts for this lame duck session and the year ahead. While for the last year managed care has largely been immune from meaningful policy debates after the more positive than expected Medicare Advantage payment update, we see a lot of moving pieces with the potential for meaningful impacts to managed care through policy uncertainty surrounding Medicare, Medicare Advantage and Medicaid.
National security concerns in biotechnology
The recent Biden administration executive order on biotechnology and biomanufacturing highlights that biotechnology and biomanufacturing are now squarely viewed as national security issues. Our report examines the changing of perspective, the reasons behind the change and where we believe things could go from here.
With average effective mortgage rates now north of 7%, virtually all housing affordability metrics we track are now to an unprecedented territory. Unsurprisingly, numerous anecdotes and indicators corroborate that the recent parabolic spike in rates has cratered what residual housing demand was still in the market this summer. While we believe single-family housing in the U.S. remains deeply under-supplied, our experience also tells us that homebuilding stocks will be challenged to outperform so long as home prices remain under pressure.
3Q tech check: Macro clouds rolling into narrative
Our third quarter conversations with technology channel partners revealed mixed trends, as overall growth rates relative to expectations and recent quarters were generally stable, but channel executives are becoming increasingly cautious.
Online advertising: Expecting headwinds and slow growth
Based on industry data points, our agency checks and recent quarterly reports, we expect generally slowing online advertising growth in 4Q22 given macro headwinds, ad privacy, as well as FX pressure. We expect meaningful FX headwinds in 4Q, particularly driven by the euro and British pound. Data points and industry checks suggest a decent backdrop from a macro basis in 3Q, with events like U.S. midterm elections and the World Cup contributing to 4Q.
We have updated our estimates and outlooks across our airline coverage, primarily reflecting in the U.S. lower 2H22-1H23 fuel price, stronger demand/fare environment, and higher industry pilot costs, as well as the impact from Hurricane Ian. In Europe, we see slightly stronger demand, lower jet fuel price (on a U.S. dollar basis) and weaker euro and sterling versus the U.S. dollar.
Regional airlines and ultra-low cost carriers stuck between pay shocks and a hard place
We believe the pilot rates being established across the regional airline industry will diminish the earnings power of regional airlines, particularly over the next two years, despite our view that the pilot supply issue should gradually improve starting in the next 12 to 18 months. Over time, we believe this challenge is likely to drive consolidation and strengthen the position of industry leaders.
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