Goldman Sachs on Jefferies Financial Group (JEF.US): 3Q26 Preview — Advisory Drives Stronger Investment Banking Trends
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Ahead of Jefferies Financial Group's (JEF) 3Q26 results, Goldman Sachs raised estimates and maintains Buy, lifting its 12-month target 3% to $67.00 from $65.00, implying 20.2% upside from $55.72; 3Q26E EPS is 11% above its prior estimate and 9% above consensus. Goldman forecasts investment-banking revenue of $1.3 billion, up 17% year-on-year and 10% quarter-on-quarter: advisory of $828 million (+26%/+23%), after Jefferies' advisory activity grew 21% against an industry decline of 3%; ECM of $321 million (+77% YoY), with Jefferies up 93% versus industry +57%; and DCM of $172 million, up 7% sequentially but 8% below the prior estimate. Trading revenue is seen at $777 million (+7% YoY, -3% QoQ), with equities of $569 million (+17%) offset by fixed income of $207 million (-13%) on tight spreads and asset management of $38 million (-42%). Jefferies' M&A backlog is up 35% year-on-year, ahead of peers (+27%) and the industry (+21%), while August announced deal volume rose 12%, supporting coming quarters. Goldman models 3Q26E ROTCE of 10.6%, rising to 11.7%/13.4% in 2027E/28E, lifted 2026–28E EPS by 3%/1%/1% on a 13.5x target P/E, and expects 4.5 million shares repurchased after a $250 million authorization top-up. Risks: trading normalization, US recession, slower merchant-bank wind-down.
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