FBR Capital Upgrades CapitalSource (CSE) to Outperform; Attractive Risk-Reward
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Price: $9.48 +0.53%
Rating Summary:
4 Buy, 6 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 12 | New: 30
Rating Summary:
4 Buy, 6 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 12 | New: 30
Trade CSE Now!
FBR Capital upgrades CapitalSource (NYSE: CSE) to Outperform from Market Perform. Price target increased from $3 to $5.
FBR analyst says, "We believe that current valuations (69% of FBR stressed scenario FYE10 TBV) provide an attractive risk-reward for investors. We are not expecting credit to improve in the next several quarters, given our belief that we are in the early stages of an arduous credit cycle; however, our upgrade reflects our belief that CSE's capital levels, even under stressed scenarios, are sufficient. Yesterday's sell-off (down 10.6%, vs the S&P 500 offless than 1%) in response to weak credit metrics appears exaggerated and presents an attractive window of opportunity for investors, in our opinion. We caution that investors need to be prepared to accept increasing losses over the next several quarters and lack of profitability until FY11. The biggest risk to our recommendation is that the current credit cycle is protracted and losses accelerate at a faster pace than expected. Management, in our view, did a good job of allaying investor concerns with regard to liquidity risk from draws on unfunded commitments and the extension of debt maturities with creditors."
CapitalSource, Inc., a specialized finance company, provides various financial products to small and medium-sized businesses in the United States.
To see more analyst ratings on CSE Click Here.
FBR analyst says, "We believe that current valuations (69% of FBR stressed scenario FYE10 TBV) provide an attractive risk-reward for investors. We are not expecting credit to improve in the next several quarters, given our belief that we are in the early stages of an arduous credit cycle; however, our upgrade reflects our belief that CSE's capital levels, even under stressed scenarios, are sufficient. Yesterday's sell-off (down 10.6%, vs the S&P 500 offless than 1%) in response to weak credit metrics appears exaggerated and presents an attractive window of opportunity for investors, in our opinion. We caution that investors need to be prepared to accept increasing losses over the next several quarters and lack of profitability until FY11. The biggest risk to our recommendation is that the current credit cycle is protracted and losses accelerate at a faster pace than expected. Management, in our view, did a good job of allaying investor concerns with regard to liquidity risk from draws on unfunded commitments and the extension of debt maturities with creditors."
CapitalSource, Inc., a specialized finance company, provides various financial products to small and medium-sized businesses in the United States.
To see more analyst ratings on CSE Click Here.
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