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Stephens downgrades First Merchants Corp. to 'equal-weight'

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Stephens downgrades First Merchants Corp. to 'equal-weight'

Downgrades

Stephens Inc. analyst Terry McEvoy downgraded Muncie, Ind.-based First Merchants Corp.'s stock rating to "equal-weight" from "overweight."

The analyst wrote that First Merchants reported strong results for the second quarter with its shares moving higher last week. The company is also expected to cross $10 billion in assets in the middle of next year, McEvoy said.

McEvoy also raised First Merchants' EPS estimates to $3.15 from $3.03 for 2018 and to $3.40 from $3.30 for 2019, given the company's higher net interest margin, second-quarter results and the analyst's updated outlook.

On M&A, First Merchants' strategy seems unchanged, McEvoy wrote, with the focus on "digestible" acquisitions in the Midwest region with cultural and geographical overlap.

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Hovde Group's Brian Zabora lowered Houston-based Green Bancorp Inc.'s stock rating to "market perform" from "outperform."

The analyst attributed the downgrade to Green Bancorp's shares that closed Friday essentially in line with the considerations per share, as well as Hovde Group not covering Veritex Holdings Inc., which announced its acquisition of Green Bancorp last week. However, Zabora wrote that the rating change "is not an indication that we are negative on the transaction."

The analyst also reduced Green Bancorp's stock price target to $24.50 from $27.

Coverage transfers

Hovde Group transferred coverage of Blairsville, Ga.-based United Community Banks Inc.'s stock to analyst Kevin Swanson from analyst Joseph Fenech. Hovde maintained its "outperform" rating for the company.

Swanson raised United Community's stock price target to $34 from $31. He also increased its EPS by 10 cents to $2.12 for 2018; by 12 cents to $2.37 for 2019; and to $2.53 for 2020.

Regarding M&A, the analyst wrote that acquisitions remain on the table for United Community, and there has been no change in its M&A strategy. "[While] the company remains open, we don't get the sense that anything is imminent," the analyst wrote.