DA Davidson Downgrades Preferred Bank (PFBC) to Neutral; $10 PT
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DA Davidson downgrades Preferred Bank (Nasdaq: PFBC) from Buy to Neutral and lowers its price target from $20 to $10.
The firm believes that the economic downturn has gotten too pronounced "even for this well capitalized". DA Davidson considers Preferred Bank's construction portfolio and notes that this segment has now become a source of credit issues for the company.
DA Davidson lowered its FY08 and FY09 EPS estimate from $1.39 and $2.64 to $0.70 and $1.94, respectively. This compares to the current Street estimates of $1.49 for FY08 and $2.22 for FY09. The firm said the lowered estimates are the result of an "increase in projected credit costs." Trading at a 48% discount to its peer group, the firm feels this valuation is "appropriate due to the risk profile of the bank's construction portfolio.
Preferred Bank operates as an independent commercial bank in California.
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