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KBW upgrades M&T Bank Corp.


Keefe Bruyette & Woods analyst Brian Klock upgraded Buffalo, N.Y.-based M&T Bank Corp. to "outperform" from "market perform," calling it a "highly profitable franchise with attractive relative valuation."

Klock expects return on assets for 2019 to be 1.65% compared to 1.38% for median peer bank, according to a report. Currently, M&T shares are trading "at an 11% discount to their five-year average forward P/E and a 7% discount to their five-year relative peer valuation," Klock wrote in the report. He also noted the bank's strong balance sheet and "history of below-peer credit costs." Low deposit and total funding betas were also listed as reasons for the upgrade.

The target price was $197, with expected EPS of $12.94 for 2018, $13.98 for 2019 and $15.37 for 2020.


Goldman Sachs analyst Alexander Blostein has reinstated coverage of Boston-based State Street Corp. with a "buy" rating and a $105 12-month price target. The report stated that the stock's 7% pullback since the announcement of the Charles River Development acquisition "more than reflects near-term earnings downside risk from the deal."

EPS estimates in the report are $7.66 for 2018, $8.41 for 2019, and $9.47 for 2020. "We think the risk/reward is attractive," wrote Blostein.

Deal commentary

Piper Jaffray analyst Nathan Race has adjusted 2019 EPS estimates for Muncie, Ind.-based First Merchants Corp. upon the announcement of its deal with Monroe, Mich.-based MBT Financial Corp. The 2019 estimate remained the same at $3.47, with 2020's estimate raised to $3.78 from $3.64. EPS accretion prediction was raised to 3.7%, higher than guidance at 2.7%. "We continue to believe shares should trade ahead of peers given [First Merchants'] above average profitability metrics, more favorable deposit betas and stronger organic growth potential," wrote Race in a report. The analyst also noted MBT's negative deposit beta; top deposit share in Monroe County, Mich.; and complementary loan portfolios as positives for the deal.