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Vining Sparks upgrades PNC Financial to 'strong buy'

Upgrades

Vining Sparks analyst Marty Mosby raised Pittsburgh-based PNC Financial Services Group Inc.'s stock rating to "strong buy" from "market outperform" while lowering the price target to $155 from $160.

Mosby lowered PNC Financial's EPS estimates by 5 cents to $10.70 for 2018, by 20 cents to $11.50 for 2019 and by 25 cents to $12.20 for 2020.

Mosby wrote that while PNC Financial's third-quarter earnings were in line with expectations, its management's guidance suggests less loan growth than previously anticipated.

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David Konrad of Macquarie Research upgraded his rating on San Francisco-based Wells Fargo & Co.'s stock to "outperform" from "neutral" and set a price target of $62.

The analyst, due to changes in operating leverage, raised the Wells Fargo 2018 EPS estimate by 1 cent to $4.42, reduced the 2019 EPS estimate by 5 cents to $5.15 and raised the 2020 EPS estimate by 5 cents to $5.85.

"In a challenging environment to find growth stories in financials, we believe investors will turn to self-help stories," the analyst wrote. The analyst further wrote that Wells Fargo fits that theme as it is expected to make significant expense savings over the next two years along with making buybacks better than peers.

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Sandler O'Neill & Partners analyst Mark Fitzgibbon upgraded Fair Lawn, N.J.-based Columbia Financial Inc. (MHC)'s stock rating to "buy" from "hold," while keeping the price target unchanged at $18.

The analyst attributed the upgrade to the recent pullback of Columbia Financial's stock, coupled with a favorable fundamental outlook.

Fitzgibbon further wrote that the company is expected to steadily drive earnings higher through a combination of prudent capital deployment approaches. Also, the company's excess capital necessarily provides some inherent downside protection, and in April 2019 the company will be able to start buying back its own stock.

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Initiations

Sandler O'Neill's Brendan Nosal is now covering Oklahoma City-based Bank7 Corp.'s stock. He gave it a "buy" rating and set a price target of $22.

The analyst introduced Bank7's stock EPS estimates at $2.30 for 2018, $1.80 for 2019 and $1.98 for 2020. The decline in 2019 EPS is due to increased share count from Bank7's initial public offering, the analyst wrote.

"Our favorable thesis boils down to our belief that [Bank7's] return profile more than compensates for the model's heightened credit risk, and the discounted valuation on forward earnings is too punitive," wrote Nosal.

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Bryce Rowe of Baird Equity Research initiated coverage of Billings, Mont.-based First Interstate BancSystem Inc.'s stock at an "outperform" rating and set a price target of $52.

The analyst projected First Interstate's operating EPS at $2.96 for 2018, $3.31 for 2019 and $3.53 for 2020.

Rowe wrote that First Interstate's core-funded balance sheet, its emergence as a disciplined acquirer of choice in the Pacific Northwest and Mountain West regions, and its current infrastructure initiatives position it to drive higher core profitability.

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Rowe also initiated coverage of Pine Bluff, Ark.-based Simmons First National Corp.'s stock with an "outperform" rating and established a price target of $34.

The analyst projected Simmons First's operating EPS at $2.32 for 2018, $2.44 for 2019 and $2.62 for 2020.

Regarding Simmons First's M&A history, the analyst wrote that the company has exercised discipline in its acquisitions by restricting the period for earning back tangible book value dilution to less than four years. Also, Simmons has developed a core competency around diligence of potential acquisition candidates and integrating and converting the acquired franchises, the analyst wrote.

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Rowe is also covering Abilene, Texas-based First Financial Bankshares Inc.'s stock now. He gave it a "neutral" rating and set a price target of $60.

Rowe projected First Financial's operating EPS at $2.19, $2.36 and $2.47 for 2018, 2019 and 2020, respectively.

The analyst wrote that First Financial's regional structure allows its local leadership to comprehend and meet specific community needs in order to make informed lending decisions and to market the region.

Regarding M&A, the analyst wrote that "First Financial has selectively used acquisitions as a means of growth but management is careful that transactions make financial, strategic, and cultural sense."

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Rowe also initiated coverage of West Des Moines, Iowa-based West Bancorp. Inc.'s stock. He gave it an "outperform" rating and established a price target of $27.

The analyst introduced West Bancorp. operating EPS estimates of $1.78 for 2018, $1.83 for 2019 and $1.95 for 2020.

Rowe wrote that the composition of West Bancorp.'s loan portfolio in recent years has trended toward commercial real estate.

Regarding M&A, Rowe wrote that West Bancorp.'s management is generally averse to acquisitions, so it is dependent on successful calling and business development efforts from bankers across its three markets. The markets include central Iowa, eastern Iowa and Rochester, Minn.