JMP Group (JMP:BUY) With the equity capital markets still at very depressed levels through Q2:16, JMP’s diversified business model delivered operating earnings of $0.10

Q2:16 Summary

• While IPO and follow on activity at JMP Securities remained extraordinarily depressed for the quarter, with JMP Securities delivering an operating loss, JMP was able to deliver meaningful operating earnings through principal transaction activity.
• Our outlook for the balance of FY:16 anticipates an uptick in the equity markets later in the year. While the major equity indices have recovered, and we have seen the start of a turnaround in IPOs and follow on equity offerings, it is yet to be seen whether this part of the business will return to normal levels by the end of the year.
• While the industry is in a cyclical downturn, JMP has been able to capitalize on this type of situation by gaining market share in similar market cycles in the past. We see this being carried out by hiring talent and developing these new areas organically, and also possibly through M&A activities if the price of a potential target is attractive. While these types of growth initiatives will likely not have an immediate impact on earnings,
  they should increase the value of the company over time.
• We maintain our BUY rating and adjust our price target to $7.50.