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Sandler O'Neill downgrades Flagstar Bancorp

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Sandler O'Neill downgrades Flagstar Bancorp

Upgrade

Sandler O'Neill & Partners LP analyst R. Scott Siefers upgraded Cleveland-based KeyCorp's stock rating to "buy" from "hold," with a price target of $19.

The analyst believes that the bank's shares have an attractive valuation. The analyst was of the view that the bank's cost savings program for 2019 should reduce the bank's reported expenses, generate positive and strong operating leverage, and improve the bank's efficiency ratio target.

His EPS estimates for KeyCorp are $1.73 for 2018, $1.91 for 2019 and $1.95 for 2020.

Downgrade

The analyst downgraded Troy, Mich.-based Flagstar Bancorp Inc.'s stock rating to "hold" from "buy," with a price target of $31.50.

Siefers wrote that Flagstar directed its capital toward balance sheet growth, which resulted in a lack of dividend yield support.

Risks to the stock's reaching the analyst's price target include more-than-expected compression of net interest margin and renewed asset quality deterioration.

Siefers' EPS estimates for Flagstar are $2.96 for 2018, $3.30 for 2019 and $4.03 for 2020.

Dropped Coverage

Joseph Gladue of Alden Securities dropped coverage of New York-based Signature Bank.

The analyst affirmed his stock rating for Signature Bank at "outperform" with a price target of $154 and maintained his EPS estimates of $9.06 for 2018, $11.18 for 2019 and $12.57 for 2020.

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Gladue also dropped coverage of South Bend, Ind.-based 1st Source Corp.

The analyst affirmed his stock rating for the company at "neutral" with a price target of $50 and maintained his EPS estimates of $3.12 for 2018, $3.35 for 2019 and $3.41 for 2020.