Piper Sandler (PIPR) AI Stock Analysis

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Piper Sandler

(NYSE:PIPR)

72Outperform

Piper Sandler's stock score reflects strong financial performance and positive earnings call highlights, offset by bearish technical indicators and high valuation metrics. The company's solid financial health and growth prospects provide a positive outlook, but investors should be cautious of potential headwinds in certain sectors.

Positive Factors

Financial Performance

Piper Sandler delivered a strong quarter with adjusted revenues significantly above estimates, indicating strong company performance.

Growth Potential

Management is confident in the ability to grow revenues and drive further operating leverage, positioning the company well for future growth.

Strategic Expansion

Piper Sandler is building a defensible moat in the middle markets given its level of scale and materially increasing relevance to private equity clients.

Negative Factors

Market Volatility

Timely investor meetings with Piper Sandler management address recent market volatility, adding some near-term uncertainty, but the long-term trajectory is only building momentum.

Valuation Concerns

Despite strong stock performance over the past two years, the current valuation reasonably reflects the outlook, leading to a Market Perform rating.

Piper Sandler (PIPR) vs. S&P 500 (SPY)

Market Cap

$3.92B

Dividend Yield1.15%

Average Volume (3M)170.98K

Price to Earnings (P/E)21.6

Beta (1Y)1.47

Revenue Growth12.29%

EPS Growth99.57%

CountryUS

Employees1,805

SectorFinancial

Sector Strength86

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)10.22

Shares Outstanding17,730,430

10 Day Avg. Volume230,509

30 Day Avg. Volume170,978

Financial Highlights & Ratios

PEG Ratio0.22

Price to Book (P/B)N/A

Price to Sales (P/S)3.10

Price to Cash Flow (P/CF)7.00

P/FCF Ratio6.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$330.00

Price Target Upside49.45% Upside

Rating ConsensusHold

Number of Analyst Covering2

Piper Sandler Business Overview & Revenue Model

Company DescriptionPiper Sandler Companies (PIPR) is a leading investment bank and institutional securities firm offering a wide range of financial services. Headquartered in Minneapolis, Minnesota, the company operates in sectors such as healthcare, financial institutions, energy, consumer, and retail, among others. Piper Sandler provides services including investment banking, public finance, institutional brokerage, and asset management, catering to corporations, private equity firms, government entities, and institutional investors.

How the Company Makes MoneyPiper Sandler makes money primarily through its investment banking and institutional securities operations. The company's revenue streams include advisory fees from mergers and acquisitions, underwriting fees from debt and equity offerings, and trading commissions from securities transactions. Additionally, Piper Sandler generates revenue from asset management fees, which are based on the assets under management (AUM) and performance of the investment funds. The company's earnings are also influenced by market conditions and economic trends, as well as its strategic partnerships and client relationships in various industries.

Piper Sandler Financial Statement Overview

Summary

Piper Sandler exhibits a solid financial performance, evidenced by strong revenue growth, robust profitability margins, and a stable balance sheet with no debt and strong equity. Cash flow metrics indicate healthy cash generation, although attention should be paid to fluctuations in gross profit margins.

Income Statement

Positive

Piper Sandler has demonstrated a strong income statement performance with a notable increase in revenue from $1.35 billion in 2023 to $1.53 billion in 2024, reflecting a revenue growth rate of approximately 13.6%. The gross profit margin in 2024 was approximately 34.4%, while the net profit margin was around 11.8%. The EBIT and EBITDA margins were both approximately 31.7%. These margins indicate robust profitability, although the decrease in gross profit from 2023 is a point of concern.

Balance Sheet

Positive

The balance sheet reveals a strong financial position with no total debt as of 2024, significantly improving from the prior year. The debt-to-equity ratio is 0, indicating no leverage, while the equity ratio stands at 54.4%, showing a solid equity base. Return on equity (ROE) is approximately 14.8%, which is healthy for the industry, reflecting efficient use of equity to generate profit.

Cash Flow

Positive

Piper Sandler's cash flow statement shows a positive trajectory, with free cash flow growing from $265.58 million in 2023 to $297.76 million in 2024, translating to a growth rate of approximately 12.1%. The operating cash flow to net income ratio is 1.73, indicating strong cash generation relative to net profits. However, the free cash flow to net income ratio is a high 1.64, suggesting the company is generating significant free cash flow relative to net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.53B	1.35B	1.37B	1.97B	1.18B
	Gross Profit
527.42M	1.21B	307.79M	587.17M	220.24M
	EBIT
485.18M	312.55M	168.98M	389.66M	59.70M
	EBITDA
251.16M	0.00	326.48M	330.37M	0.00
	Net Income Common Stockholders
181.11M	85.49M	110.67M	278.51M	40.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
482.83M	383.10M	365.62M	970.97M	507.94M
	Total Assets
2.26B	2.14B	2.18B	2.57B	2.00B
	Total Debt
98.82M	164.16M	234.77M	214.63M	294.48M
	Net Debt
-384.01M	-218.93M	-130.85M	-756.34M	-213.46M
	Total Liabilities
840.16M	841.51M	927.53M	1.34B	1.07B
	Stockholders Equity
1.23B	1.09B	1.05B	1.06B	829.42M
Cash Flow		Free Cash Flow
297.76M	265.58M	-255.51M	686.51M	762.18M
	Operating Cash Flow
313.25M	275.63M	-224.91M	707.09M	779.76M
	Investing Cash Flow
-31.77M	-10.05M	-127.10M	-20.58M	-435.00M
	Financing Cash Flow
-180.61M	-249.59M	-250.06M	-223.12M	-87.56M

Piper Sandler Technical Analysis

Technical Analysis Sentiment

Negative

Last Price220.81

Price Trends

50DMA

268.75

Negative

100DMA

289.75

Negative

200DMA

279.27

Negative

Market Momentum

MACD

-7.22

Negative

RSI

39.76

Neutral

STOCH

27.36

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PIPR, the sentiment is Negative. The current price of 220.81 is below the 20-day moving average (MA) of 244.99, below the 50-day MA of 268.75, and below the 200-day MA of 279.27, indicating a bearish trend. The MACD of -7.22 indicates Negative momentum. The RSI at 39.76 is Neutral, neither overbought nor oversold. The STOCH value of 27.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PIPR.

Piper Sandler Risk Analysis

Piper Sandler disclosed 32 risk factors in its most recent earnings report. Piper Sandler reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Piper Sandler Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EVR	78 Outperform	$6.84B	19.25	23.03%	1.84%	22.67%	47.20%
PJT	76 Outperform	$5.03B	26.33	62.26%	0.77%	29.48%	63.03%
SNEX	73 Outperform	$3.64B	13.55	16.40%	―	60.57%	17.39%
LAZ	72 Outperform	$3.12B	12.94	51.51%	5.77%	23.88%	―
PIPR	72 Outperform	$3.92B	21.57	15.66%	1.15%	12.29%	99.57%
MC	70 Outperform	$3.88B	28.50	34.27%	4.84%	39.75%	―
Sector *	64 Neutral	$13.37B	9.30	9.39%	4.85%	16.11%	-8.85%

* Financial Sector Average

Performance Comparison

PIPR

Piper Sandler

220.81

37.41

20.40%

EVR

Evercore Partners

173.81

-9.61

-5.24%

SNEX

StoneX Group

75.55

32.07

73.76%

LAZ

Lazard

34.67

-1.36

-3.77%

Moelis

50.60

0.85

1.71%

PJT

PJT Partners

129.60

38.14

41.70%

Piper Sandler Earnings Call Summary

Earnings Call Date: Jan 31, 2025 | % Change Since: -27.84% | Next Earnings Date: Apr 25, 2025

Earnings Call Sentiment Positive

The earnings call highlights a strong financial performance for 2024, with record revenues in several segments and positive growth in advisory and corporate financing. However, challenges in the healthcare and depository sectors, along with increased expenses, present areas of concern. Overall, the positive achievements slightly outweigh the challenges.

Highlights

Record Quarterly Revenues

The fourth quarter of 2024 was the best quarter of the year, with adjusted net revenues of $499 million, marking the second highest quarterly revenues on record.

Strong Full Year Performance

For the full year 2024, adjusted net revenues were $1.5 billion, with a 16% growth compared to 2023 and a 37% increase in net income.

Advisory Services Success

Advisory services accounted for over half of firmwide net revenues, with 2024 being the second strongest advisory year on record. The firm completed 288 advisory transactions and ranked as a top three advisor on announced US M&A deals under $1 billion.

Corporate Financing Growth

Corporate financing revenues increased by 33% from 2023, reaching $174 million, driven by more equity financings.

Public Finance Growth

Municipal financing revenues increased by 47% from 2023, marking the second strongest year on record.

Equity Brokerage Record

Equity brokerage revenues reached a record $215 million for the full year, with a broad-based performance across high touch, electronic, and derivatives trading.

Lowlights

Healthcare Sector Challenges

The healthcare sector faced challenges due to regulatory scrutiny and tough market conditions, resulting in a difficult year.

Depository Sector Difficulties

The depository sector experienced headwinds, with a tough year for completed depository M&A transactions.

Increased Non-Compensation Expenses

Non-compensation expenses for 2025 are expected to be higher due to increased occupancy costs, inflationary pressures, and the relocation of the Minneapolis headquarters.

Company Guidance

During the Piper Sandler Companies' Fourth Quarter and Full Year 2024 Earnings Conference Call, management provided guidance highlighting significant achievements and future expectations. The firm reported adjusted net revenues of $499 million for the fourth quarter, marking their best quarter of 2024 and second highest quarterly revenues on record, with a 24.4% operating margin and an adjusted EPS of $4.80. For the full year, they achieved adjusted net revenues of $1.5 billion, a 19.7% operating margin, and an adjusted EPS of $12.69. Piper Sandler experienced 16% revenue growth over 2023, driven by a diverse range of industry teams, resulting in a 37% increase in net income. The company's advisory services generated $809 million in revenues for the year, with over half of firmwide net revenues coming from this sector for the fourth consecutive year. The firm completed 288 advisory transactions and ranked as a top three advisor in announced US M&A deals under $1 billion. Corporate investment banking revenues reached $983 million, up 17% from 2023, with sector gains led by financial services and record performance from the energy and power group. Looking ahead, Piper Sandler expects continued growth in advisory revenues and an increase in equity and debt financing activity in 2025, with a focus on expanding their geographic footprint and growing revenues from private equity clients. They aim to grow annual corporate investment banking revenues to $2 billion over the medium term.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.