Jefferies Downgrades Associated Banc-Corp (ASB) to Hold
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Jefferies downgraded Associated Banc-Corp (NYSE: ASB) from Buy to Hold with a price target of $24.00 (from $23.00) to reflect post-election stock/EPS dynamics.
Analyst Ken Usdin commented, "We downgrade ASB to Hold (from Buy) to reflect a fair valuation and an asset-sensitivity profile that falls amongst the lowest in our coverage universe. While ASB has a decent amount of C&I loans (34% of book), the sensitivity profile is weighed down by large CRE and resi. mortgage portfolios and a deposit franchise that has 15% wholesale/network deposits. Additionally, while ASB has taken its pain on energy loans (8% losses to date), its diversified geographic exposure could keep pressure on credit quality. More than 50% of its energy exposure sits outside of Texas, a state that has seen the bulk of new capital flows, particularly in the West Texas Permian Region (19% of ASB's exposure). Our price target of $24 implies 16.5x our ’18 EPS estimate or 100% of the current '17 S&P 500 P/E multiple. Upside risks to our downgrade: proves more rate-sensitive than expected and energy credit quality improves significantly."
Shares of Associated Banc-Corp closed at $23.00 yesterday.
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Related EntitiesJefferies & Co, Standard & Poor's
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