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D.A. Davidson Assumes Coverage On Several Regional Banks

D.A. Davidson Assumes Coverage On Several Regional Banks - First Merchants Corporation NASDAQ:FRME, Lakeland Financial Corporation NASDAQ:LKFN

D.A. Davidson analyst Kevin Reevey just initiated coverage on four U.S. regional banks, and he apparently has a very mixed outlook for the space. Here’s a summary of what he had to say.

Reevey sees the bank holding a “leadership position in some of the region’s most attractive markets.” In addition, he noted the stock’s multiple based on 2017 earnings estimates is only 12.6x, 11 percent lower than its peer group.

Reevey pointed out that Lakeland is “one of the top five players in some of the Hoosier state’s best markets.” However, at 16.4x 2017 earnings, the stock currently trades at a 19 percent premium to its Indiana peers.

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Reevey praised the company’s “balanced loan portfolio with stable credit quality.” However, like Lakeland, the stock currently trades at a premium to Indiana peers. Its 15.7x 2017 earnings multiple is 7.1 percent above the rest of the group.

“While management is pulling all of the right levers to improve the company’s operating performance and grow earnings, we believe that at current levels the shares of MFSF are more than fully valued,” Reeves explained. At 15.5x 2017 earnings, the stock trades at a 16.5 percent premium to its peer group.

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Disclosure: The author holds no position in the stocks mentioned.

Jul 2016DA DavidsonInitiates Coverage onBuy
Jan 2016Stephens & Co.UpgradesEqual-weightOverweight
Dec 2015SunTrust Robinson HumphreyInitiates Coverage onNeutral

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