Citing the 10% decline in the stock this month and positive comments from management following Q2 earnings last week, Raymond James doubles down on Signature Bank (NASDAQ:SBNY), upgrading to Strong Buy from Outperform.
Credit Suisse’s small-cap strategists add six new stocks to their list of favorites: SunCoke Energy (SXC), RPM international (RPM), Zions Bancorp (ZION), Signature Bank (SBNY), Edwards Lifesciences (EW) and Rexnord (RXN).
SXC brings to the table a low cost of capital and proven business model, the firm says in seeing business development opportunities across various industries (including coke making, coal handling and ferrous) which could be worth as much as 3x-4x in annual EBITDA as the company’s current asset base; the firm also cites SXC's low commodity price exposure relative to steel mills and coal miners.
SXC also maintains a 55.9% common unit interest and a general partnership interest in SunCoke Energy Partners (SXCP), which allows SXC to benefit disproportionately from the MLP’s growth given their incentive distribution rights.
Launching coverage on a host of financial names with Neutral today, SunTrust Robinson Humphrey does start two stocks with a Buy, and they're on the move: Pinnacle Financial (PNFP +2.7%) and Signature Bank (SBNY +2.6%). Both have stood out to the sell-side in the past for being among the few organic growth names in banks.
Started at Neutral: Associated Banc-Corp (ASBC), Independent Bank (INDB), MB FInancial (MBFI), Old National (ONB), Piper Jarray (PJC -0.9%), Private Bancorp (PVTB), Wintrust Financial (WTFC), First Midwest (FMBI), and Fulton Financial (FULT).
"Signature Bank (SBNY) is one of the few organic growth stories in banks, with plenty of room for share gains in NYC and its surrounding markets," says analyst Ryan Nash, resuming the stock with a Buy and $148 price target.
"SBNY's unique model entails hiring seasoned teams with existing books of business (loans/deposits) from competitors and utilizes a high level of customer service to deepen these relationships. Given this structure, we believe it can penetrate further into multifamily, while continued growth in Signature Financial and long-term market expansion should keep growth above expectations for years to come."
JPMorgan's Steven Alexopoulos finds it hard to get enthused about regional banks (KRE -0.4%) after big gains this year have left valuations rich amid a weak macro outlook. But a bank stock analyst has to pick banks, and he does have a few favorites.
For a small-cap growing fast thanks to its focus on loan growth, Alexopoulos has Signature Bank (SBNY) rated a Buy, and for a mid-cap pure play on high net worth and Silicon Valley, First Republic Bank (FRC -0.8%) is the pick.
Alexopoulos also identifies three regionals looking pricey relative to 2014 estimates, but far more attractive based on long-term earnings power. In addition to Comerica (CMA -0.3%) (see earlier), his favorites are Zions Bancorp (ZION -0.7%) and KeyCorp (KEY -0.2%). Alexopoulos notes Key trades at a 26% discount to the broader group of mid-cap banks in his coverage universe.
BB&T, says McEvoy has averaged a 12.5x forward P-E multiple vs. the 10.6x it's at now.
KeyCorp trades at just 11.3x earnings vs. its peer group at 13.
FirstMerit has had a big run and trades at 13.9x estimates, but it's a growth play - 12% organic loan growth this year along with reasonably-priced acquisitions - and deserves this multiple, says McEvoy.
At 18x consensus, Signature Bank is also a growth play deserving of a big multiple - net loans and leases were up 13% Y/Y in Q2.
Among banks and credit card names, FBR favors those picking up new teams/market share - namely Signature Bank (SBNY -1.4%) and Discover (DFS) - as well as those trading near book value, like HomeStreet (HMST -0.6%). PNC Financial remains a favorite for its strong growth prospects, as well as servicers like Nationstar (NSM +0.2%), Walter Investment (WAC -2.3%), and New Residential (NRZ -0.3%).
Those most exposed to a protracted government shutdown are smaller community banks in the D.C. area like Eagle Bancorp (EGBN -1.4%), and Cardinal FInancial (CFNL -0.2%). Capital One (COF -1.9%) - by dint of its Chevy Chase acquisition - would also feel a pinch.
On mREITs (REM -0.1%), the team expects Q3 book values to increase slightly, but warns its estimates are based on relatively static portfolios - "but for most names, portfolios are anything but that." With all the volatility, most mREITs may have hedged away the recent MBS rally. Starwood Property Trust (STWD) remains FBR's best idea thanks to its commercial real estate exposure.
Signature Bank is a full service commercial bank, which offers a variety of business and personal banking products and services, as well as investment, brokerage, asset management and insurance products and services through its subsidiary.