Upgrades
* Brean Capital's Blair Brantley raised CenterState Bank Corp.'s rating to "buy" from "hold."
Recent stock underperformance, on top of asset sensitivity and the "additional diversity and growth levers" from the future SBA and mortgage buildout, make the shares "worth an investment." Brantley, however, acknowledged the possibility of some near-term stock sales, as the recently acquired HCBF Holding Co. Inc. had private equity ownership.
Brantley gave the stock a price target of $31. It had closed at $25.99 on Jan. 31.
* CenterState also got an upgrade from Keefe Bruyette & Woods' Brady Gailey. The rating was revised to "outperform" from "market perform," and Gailey increased the target price by a dollar to $32.
The analyst finds much to like in the company: its profitability, management, markets and valuation. CenterState also has a history of good acquisitions and plans to stay acquisitive, though not at current stock price levels. Winter Haven, Fla.-based CenterState sees some targets to pursue in central and north Florida and may look to Atlanta after. Banks of interest would have $500 million to $2.5 billion in assets.
* Piper Jaffray's Brett Rabatin upgraded Veritex Holdings Inc., writing "we like the current valuation, [but] the upgrade is more a function of higher confidence loan/revenue growth will continue to remain significantly above peers."
The analyst expects Dallas-based Veritex to bring its efficiency ratio down to below 50% in the next two years and its return on assets up to 1.35% to 1.40%. Most of its benefit from tax reform is expected to go straight to the bottom line.
The rating was revised to "overweight" from "neutral." The price target was increased by $2 to $33.
Downgrade
* Banc of California Inc., on the other hand, got downgraded to "neutral" from "buy."
B. Riley FBR's Steve Moss said the company's "turnaround is likely to take longer," as it continues to de-risk its balance sheet and its marginal funding on loan growth continues to rise.
Moss lowered the price target by $5 to $20.
Notable reiterations
* And Compass Point's Charles Peabody reiterated his "neutral" rating and $62 price target for Wells Fargo & Co.
"[I]t's clear to me," the analyst wrote, "that anyone owning or buying [Wells Fargo's] shares today should be doing so on the belief that the year 2019 will finally bring with it positive operating leverage back to this company. ... [But] the further that 'crossover' point (from 'transition' to 'growth') gets pushed out, the greater the risks are that that future potential moment of 'growth' gets diluted by higher credit costs."
He lowered his 2018 EPS estimate to $4.78 from $4.95, over the "weaker revenue outlook" and the "stubbornly high" operating expenses. Almost all Wells Fargo's net income growth this year may be courtesy of the tax cut, Peabody added.
