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Stephens initiates on Pacific Premier Bancorp


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Stephens initiates on Pacific Premier Bancorp


* Stephens Inc. analyst Tyler Stafford started covering Pacific Premier Bancorp Inc. with an "overweight" rating and a 12-month price target of $39.

The analyst thinks the Irvine, Calif.-based company is well-positioned to keep outperforming its peers over the next several years, partly because of its "double-digit organic growth engine, and a healthy M&A appetite."

In addition, he thinks the company will at some point attract larger acquirers because of its attractive footprint in California, quality deposit base, and commercial-focused loan portfolio. Stafford thinks Pacific Premier is one of the cheapest banks on the West Coast. The company is trading at 14.1x, compared to its peers at 16.9x. Meanwhile, Pacific Premier has a better growth profile than its peers' and reports above-peer profits, including a return on tangible common equity of more than 15% and a return on assets of more than 1.25%.

* Piper Jaffray analyst Matthew Breese initiated coverage of Westfield, Mass.-based Western New England Bancorp at "overweight" with a price target of $10.50.

The analyst thinks the company will be able to deploy excess capital, grow its loans at a pace of more than 10% per year, and improve its profitability. He estimates the company will report a 2018 return on assets of 0.62%, compared to 0.35% recorded in the third quarter of 2016.

In addition, the analyst noted that the company's Western Massachusetts markets are slow when it comes to growth, but greater Springfield is expected to go through a resurgence with $4 billion to $5 billion in estimated economic activity over the next several years.

Western New England Bancorp ranks No. 4 in market share. Breese thinks the geographic footprint along with better profits will help the company improve its valuation to 1.40x tangible book value over the next 12 months, in line with peers, compared to the current level of approximately 1.25x tangible book value.