Jefferies Financial Group Inc: Risk Reward Update

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Jefferies Financial Group Inc: Risk Reward Update

UpdateM

Risk Reward – Jefferies Financial Group Inc (JEF.N)

KEY EARNINGS INPUTS CATALYST CALENDAR

Drivers 2025 2026e 2027e 2028e Date Event Source: Refinitiv, Morgan Stanley

23 Jun 2026 -

Total Revenue y/y (%) 3.9 22.3 18.5 8.1 Q2 2026 Jefferies Financial Group Inc Earnings Release

29 Jun 2026

Investment Banking & Capital

6.5 26.5 22.0 9.7

Markets Revenues Y/Y (%)

Expense Ratio (%) 88.1 86.4 84.0 82.3

Comp Ratio (%) 52.6 54.0 52.5 52.3

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Capital markets / macro environment RISKS TO UPSIDE FY Nov 2027e

Market share Capital markets environment accelerates,

Operating Leverage particularly across sponsors Sales /

Capital return Market share gains Revenue 8,162 10,647

Merchant Bank exits Comp ratio improves ($, mm) 9,130

Favorable resolutions of credit/legal concerns

GLOBAL REVENUE EXPOSURE RISKS TO DOWNSIDE 1,235

Net income

APAC, ex Japan, Mainland Credit/legal related headlines 888 1,306 0-10% China and India Market volatility drives weaker capital markets ($, mm) 1,062

0-10% Europe ex UK activity

0-10% UK Sponsors remain on the sideline

5.30

80-90% North America Loss in market share EPS

3.65 5.60

Comp ratio remains elevated ($)Source: Morgan Stanley Research Estimate 4.69

View explanation of regional hierarchies here

OWNERSHIP POSITIONING

Mean Morgan Stanley Estimates

MS ALPHA MODELS Inst. Owners, % Active 50.4% Source: Refinitiv, Morgan Stanley Research

HF Sector Long/Short Ratio 1.4x

3/5 24 Month 5/5 3 Month

BEST Horizon MOST Horizon HF Sector Net Exposure 7.5%

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is Refinitiv; MSPB Content. Includes certain hedge fund

the highest favored Quintile and 5 is the least favored exposures held with MSPB.