FBR Capital Downgrades Astoria Financial (AF) to Underperform as Sale Terminated

FBR Capital downgraded Astoria Financial (NYSE: AF) from Market Perform to Underperform with a price target of $15.00 given the termination of its sale to New York Community Bank (NASDAQ: NYCB).

Analyst Bob Ramsey commented, "We downgrade shares of Astoria Financial to Underperform (from Market Perform) given the termination of its sale to New York Community Bank (NYCB – Underperform). We consider a better offer unlikely, and the current valuation reflects takeout hopes more than fundamentals. Astoria has been unable to earn its cost of capital for years, despite pristine credit and a favorable NIM environment, and its liability-sensitive balance sheet is now facing rising rates. While AF needs to improve profitability, we struggle to see a scenario where Astoria is able to earn reasonable ROEs. Our $15 price target reflects a 1.1x TBV multiple and 25x 2018 EPS, generous in our view given AF's sub-5% ROTCE and lack of earnings growth. We adjust our 2016 EPS estimate to $0.64 (from $0.65), reiterate our 2017 EPS estimate of $0.60, and establish a 2018 EPS estimate of $0.60."

For an analyst ratings summary and ratings history on Astoria Financial click here. For more ratings news on Astoria Financial click here.

Shares of Astoria Financial closed at $18.17 yesterday.

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