Raymond James analyst William Wallace IV downgraded Reston, Va.-basedAccess National Corp.to "market perform" from "outperform" after the company's second-quarterearnings release.
The analyst rescinded his price target of $21, increased his2016 EPS estimates to $1.58 from $1.45 and maintained his 2017 EPS estimate at $1.45.
He noted that the company reported earnings above expectationsbecause of significantly higher-than-expected mortgage banking income. The companyreported a 45% increase in mortgage originations and 124-basis-point higher gain-on-salemargins quarter over quarter. In addition, Access National's loan sales jumped 103%to $6.6 million, compared to the previous quarter.
"While we expect the pace of origination activity to slowfrom the heightened levels seen in 2Q, we expect the mortgage bank to continue tocapitalize on the low rate environment and post elevated profitability in 2016,"the analyst noted. He lowered his margin expectations for 2016 and 2017, althoughhe thinks the company's loan growth will remain relatively strong through 2017.
He expects that the company will continue to report above-peerprofits, but the company is currently trading above his former price target of $21,so the analyst lowered his rating.
D. A. Davidson analyst Gary Tenner downgraded to "neutral" from"buy," after the company's second-quarterearnings release, but maintained the 12- to 18-month price target at $45.
The analyst also lowered his 2016 and 2017 EPS estimates to $2.93and $3.06, from $2.97 and $3.08, respectively.
He noted that the company should maintain a premium valuation,as it is projecting a return on tangible common equity of 14.9%, after reportinga 14.61% return in its recent earnings. However, based on the recent increase incompany's share price and its modest growth outlook for 2017, he believes that hisprice target for the company does not merit a "buy" rating. The analystalso thinks that a significant capital return to shareholders is already reflectedin the price.
In addition, he noted that the company will evaluate its capitalplan after its DFAST submission, which is due July 31. The company, in the past,has announced special dividends to return capital to its shareholders as a preferredmethod. However, the analyst noted that the management team has indicated that buybacksmight be an option as well.
Furthermore, Tenner dropped coverage of Los Angeles-based Los Angeles-basedBBCN Bancorp Inc. announcedthat its merger with Wilshirewill complete by the endof business July 29.
The analyst last rated the company at "buy" with aprice target of $13.50.