12:18 PM EDT, 09/17/2024 (MT Newswires) -- Jefferies Financial Group ( JEF ) is well positioned to capitalize on a rebound in financial sponsors, with M&A revenue projected to grow 50% over the next 12 months, UBS said in a report.

UBS, which initiated coverage of Jefferies with a buy rating and a $67 price target, said Jefferies has the largest exposure to financial sponsors among investment firms that it covers.

"With industry M&A volumes past their 2023 lows and debt markets open to underwriting new business (leveraged loan

issuance is up 50% YTD), we find the risk/reward profile for JEF heading into an improving IBD environment screens quite attractive," UBS said. IBD refers to investment banking division.

The report also said the anticipated US interest rate cuts should boost activity, which together with Jefferies' increased managing director headcount will help increase M&A revenue.

"While the stock's performance YTD (+40%) reflects investor optimism/conviction around the firm's near-term earnings outlook, we see further upside to numbers as senior bankers new to the platform ramp-up...should drive productivity growth through FY2026," UBS said.

Price: 61.98, Change: +2.31, Percent Change: +3.86