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Stephens Inc. initiates coverage of First Interstate BancSystem, Glacier Bancorp

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Stephens Inc. initiates coverage of First Interstate BancSystem, Glacier Bancorp

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James Fotheringham of BMO Capital Markets upgraded Citigroup Inc. to "outperform" from "market perform," citing valuation. He maintained his $92 price target.

The analyst called the company's 2018 fourth-quarter earnings and management's business outlook "just fine," noting that the stock is undervalued where it is trading, making it a "very inexpensive stock."

Fotheringham wrote that the company has more capital and is growing it faster than peers. And as Comprehensive Capital Analysis and Review returns into focus, shares of Citigroup should outperform. Also, the company's earnings are more seasonal than its peers' and the first quarter is generally the strongest. The third and last potential positive catalyst that the analyst mentioned was a weakening U.S. dollar possibly benefiting the company's earnings.

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Initiations

Stephens Inc. analyst Gordon McGuire initiated coverage of Billings, Mont.-based First Interstate BancSystem Inc. at "overweight," and that of Kalispell, Mont.-based Glacier Bancorp Inc. with an "equal-weight" rating.

McGuire wrote that both banks should be able to leverage their best-in-class market share and funding franchises to continue outperforming peers.

According to McGuire, Glacier's valuation is already reflective of its franchise's quality, while that of First Interstate has room for further improvement.

The analyst believes that both banks have the most valuable funding and deposit franchises, and have outperformed peers with strong net interest margin expansion.