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Wedbush Securities upgrades Fifth Third to 'outperform'

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Ep.1: Broadcast's Big Year


Global M&A by the Numbers Q4 2023

Wedbush Securities upgrades Fifth Third to 'outperform'


Wedbush Securities analyst Peter Winter raised Cincinnati-based Fifth Third Bancorp's stock rating to "outperform" from "neutral" and increased the price target to $34 from $31.

The analyst wrote that Fifth Third's stock has been under pressure, having lost 13% since the May 21 announcement that it would acquire MB Financial Inc.

Winter further wrote that MB Financial's deal "appears to be a solid acquisition," and that the deal is complementary considering minimal commercial banking overlap. He also noted that while Fifth Third has a stronger consumer bank, MB Financial has better branch locations.

The analyst reduced Fifth Third's EPS estimate by 1 cent to $2.53 for 2018, to reflect slightly less loan growth than Fifth Third's management guidance for the third quarter and full year 2018. The analyst, however, raised Fifth Third's EPS estimate by 4 cents to $2.76 for 2019 to factor in the MB Financial deal, assuming that the transaction closes at the end of the first quarter of 2019. Fifth Third's EPS estimate for 2020 was introduced at $3.14 by the analyst.


Betsy Graseck of Morgan Stanley upgraded Boston-based State Street Corp.'s stock rating to "overweight" from "equal-weight" and raised the price target to $115 from $109.

Graseck wrote that she anticipates catalysts over the coming six to 12 months as State Street gives more clarity on its acquisition of Charles River Systems Inc. and related synergies, announces signing up of large clients for Charles River's products, and recommences buybacks in 2019.

The analyst further mentioned that acquisition of Charles River Systems makes sense as "we are confident [State Street] can prove to asset management clients that the new Straight Through Processing technology integration works."


Buffalo, N.Y.-based M&T Bank Corp.'s stock rating was upgraded to "outperform" from "market perform" by Keefe Bruyette & Woods' Brian Klock.

Klock set M&T Bank's stock price target at $197.

The analyst attributed the upgrade to M&T Bank's current valuation being attractive relative to its historical price-to-earnings ratio and price-to-tangible book value premium to the median peer bank.

Klock further wrote: "We believe [M&T Bank] continues to have one of the strongest balance sheets in the group," and has a leading deposit market share in half of its footprint, with more than one-third of its deposits from demand deposit accounts.

"This strong core funding has translated to significantly lower-than-peer deposit and total funding betas," wrote Klock.


FIG Partners analyst Christopher Marinac raised Dunn, N.C.-based Select Bancorp Inc.'s stock rating to "outperform" from "market perform" and set the price target at $14.75.

The analyst established Select Bancorp's EPS estimate at 90 cents for 2019, and increased Select Bancorp's EPS estimate for 2018 by 1 cent to 87 cents.

Marinac wrote, "We anticipate both Core Deposits and Loans expand with the incremental capital." Regarding deal-making, the analyst wrote that while external M&A for Select Bancorp is possible, it has not been factored into his EPS outlook.


Jacquelynne Bohlen of Keefe Bruyette & Woods is now covering Los Angeles-based Pacific City Financial Corp.'s stock. She gave it a "market perform" rating and set the price target at $22.

The analyst introduced Pacific City Financial's EPS estimates at $1.73 for 2018, $1.80 for 2019, and $2.10 for 2020.

Bohlen wrote that "Though current levels of liquidity may slow [Pacific City Financial's] deposit repricing over the next few quarters versus peers as the bank has more flexibility, the effect may be somewhat offset by [Pacific City Financial's] higher level of time deposits versus peers."


Christopher O'Connell of KBW initiated coverage of New York-based Amalgamated Bank's stock. He gave it a "market perform" rating and set a $19 price target.

The analyst introduced Amalgamated Bank's operating EPS estimates of $1.44, $1.49 and $1.83 for 2018, 2019 and 2020, respectively.

The analyst wrote that Amalgamated Bank "focuses on serving socially responsible organizations, ranging from unions to non-profits to political campaigns and more."

With the completion of Amalgamated Bank's acquisition of New Resource Bank in May, Amalgamated Bank is the largest bank focused on socially responsible organizations, but only operates in three of its six largest target markets, the analyst wrote.

The analyst further mentioned that he expects that Amalgamated Bank will look to expand to new markets either through organic or acquisitive means, "as we identified seven values-based banks that could potentially align with a larger partner like [Amalgamated Bank]."


Pacific City Financial's stock coverage was also initiated by Raymond James analyst Donald Worthington. He gave it an "outperform" rating and established a price target of $22.

The analyst introduced Pacific City Financial's EPS estimates at $1.74 for 2018 and $1.92 for 2019.

The analyst wrote that "Pacific City has established an attractive franchise as the third largest U.S. based Korean-American bank with branches located in Southern California, New York, and New Jersey, as well as several loan production offices in key markets across the country."

Pacific City Financial has produced strong loan and deposit growth, and its profitability metrics are above average, wrote Worthington.