FBR Capital Reiterates an 'Outperform' Rating on CapitalSource (CSE) After Meeting With Management

September 23, 2009 7:14 AM EDT

FBR Capital reiterates an Outperform rating on CapitalSource (NYSE: CSE), raises price target from $5 to $6

FBR analyst says, "We believe our investment thesis regarding CSE (sufficient capital and liquidity to manage through the cycle) is intact and that near-term liquidity needs, primarily unfunded commitments, are tracking in line with management projections (expected ~15% aggregate funding rate). Credit losses should remain relatively stable over the next several quarters with some volatility quarter to quarter, reflecting a shift in NPA mix to increased lower severity assets. Admittedly, investors need to take a longer-term view with regard to CSE, given our expectation that the remainder of 2009 and the majority of 2010 will be challenging (no earnings until 2011); however, we believe a 16.2% TCE ratio, combined with a valuation of 60% of TBV, provides an attractive risk/reward profile."

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CapitalSource, Inc., a specialized finance company, provides various financial products to small and medium-sized businesses in the United States.

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