Shares of Jefferies Financial Group Inc (NYSE:JEF) slipped 2.5% in after-hours trading following the announcement of mixed financial results for the second quarter of fiscal 2025.
The investment bank posted net revenue of $1.63 billion, surpassing analyst estimates, but earnings per share came in slightly below expectations at $0.40 versus the forecasted $0.42. Net income attributable to common shareholders fell sharply to $88 million, marking a 40% decline compared to the same quarter last year. The downturn was largely driven by weaker Fixed Income trading and reduced contributions from Jefferies Finance, which counterbalanced stronger performance in other areas of the business.
Morgan Stanley analysts responded by trimming their price target on Jefferies stock by $1, lowering it to $54, citing primarily diminished fixed income trading revenues. The brokerage also warned that the stock could experience “choppy” trading as investors digest the mixed quarterly performance.
The firm noted, “The quarter presented both headwinds and tailwinds, with activity picking up notably in May.”
Investment banking net revenue increased 6.4% year-over-year to $786 million, fueled by a robust 61% jump in Advisory revenue to $458 million as merger and acquisition activity gained momentum. However, equity underwriting revenue plunged 51%, reflecting ongoing market volatility and investor hesitation around capital markets.
CEO Richard Handler and President Brian Friedman emphasized, “Despite a challenging start to the quarter, our advisory business showed solid strength, and we see our market position continuing to improve. With a strong pipeline and growing client engagement around capital formation and strategic transactions, we are optimistic about the second half of 2025.”
Capital markets revenues totaled $704 million, down slightly year-over-year. The segment’s results were mixed, with equity revenues rising 24% to $526 million, offset by a 37% decline in fixed income amid subdued global trading activity, particularly in distressed and securitized products.
Asset Management revenues dipped modestly to $155 million, primarily due to lower management fees, though investment returns for the quarter surged 43%, driven by strong performance in select strategies. Despite this, the segment remains behind 2024 year-to-date figures.
Jefferies maintained its quarterly dividend at $0.40 per share, payable August 29, despite recent earnings misses in three of the past four quarters. The firm also repurchased $58 million in shares, aiming to support shareholder returns amid ongoing industry uncertainties.
Following the earnings release, Jefferies’ stock retreated as investors absorbed the mixed results. With macroeconomic and geopolitical volatility continuing to pressure underwriting and trading, the company’s solid M&A advisory business and growing deal pipeline could prove crucial in regaining investor confidence in the latter half of the year.