Decreasing Our Stifel Financial Fair Value Estimate Due to Market Depreciation

Stifel Financial, along with other investment banks, had strong revenue in 2020 and 2021 as economic uncertainty led to strong trading volume. Additionally, an initial need for capital in the recession and then low interest rates and a strong stock market led to high capital-raising activity. We currently forecast revenue to be relatively flat over the next couple of years. The unusually high institutional securities revenue of 2021, which was 36% higher than in 2020 and 77% higher than in 2019, should normalize lower. The reduction in institutional group revenue will be offset by the company’s banking business, which should experience significant growth over the next several years with rising interest rates. We currently forecast net interest income to more than double over the next several years from about $500 million, or 11% of net revenue, in 2021 to over $1 billion, more than 20% of net revenue.