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Sandler upgrades Flagstar Bancorp to 'buy'

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Sandler upgrades Flagstar Bancorp to 'buy'

Upgrade

* Scott Siefers of Sandler O'Neill & Partners upgraded Troy, Mich.-based Flagstar Bancorp Inc.'s stock rating to "buy" from "hold" after its announced acquisition of Wells Fargo & Co.'s 52 retail branches, and about $2.3 billion in deposits and $130 million in loans.

The analyst's new price target for Flagstar is $42.

The transaction would provide Flagstar Bancorp the No. 1 deposit market share in Fort Wayne, Ind., and in the upper peninsula of Michigan, wrote the analyst. Siefers further wrote that the deal "immediately transforms [Flagstar Bancorp's] funding complexion for the better."

Downgrade

* BMO Capital Markets analyst Lana Chan downgraded her rating on Wayzata, Minn.-based TCF Financial Corp.'s stock to "market perform" from "outperform."

The analyst kept TCF Financial's stock price target unchanged at $28.

The downgrade, according to Chan, is because TCF Financial is nearing the $28 target price. Chan wrote that "we still view [TCF Financial] as a possible take-over candidate, but we would not recommend a stock based solely on takeout potential." TCF Financial's exit from the auto origination business makes it a more desirable bank for acquisition, Chan wrote.