UBS Trims Numbers on FirstMerit (FMER) After Citizens Deal

September 18, 2012 12:00 PM EDT Send to a Friend
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Price: $17.28 -0.23%

Rating Summary:
    7 Buy, 7 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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UBS adjusted estimates and its price target on Buy-rated FirstMerit Corporation (NASDAQ: FMER) from $19 to $17.50 following the acquisition of Citizens Republic for $22.50/share or $912MM in a 100% stock transaction.

UBS is reducing '13E from $1.51 to $1.38 but raising '14E from $1.70 to $1.86. The price target was cut due to higher risks.

Commenting on the deal, UBS said it was "not overly compelling at 1.3X TBV, 1.8X credit-adjusted TBV, 1.7X Price+TARP/TBV, 2.5X fully adjusted TBV, 17.7X ‘13E EPS, and a 3.5% core deposit premium." In addition, "FMER also expects to repay Citizens' $345MM of TARP and $750MM of higher cost debt via cash, debt, and preferreds. Cost savings are estimated at $59MM or 22% of Citizens’ base. The deal further solidifies FMER's Midwest franchise ranking #8 in MI (~4% share) and #11 in WI (~1% share)."

For an analyst ratings summary and ratings history on FirstMerit Corporation click here. For more ratings news on FirstMerit Corporation click here.

Shares of FirstMerit Corporation closed at $14.94 yesterday.


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