Stephens Upgrades Capital Bancorp (CBNK) to Overweight, 'Strategically and Financially Compelling Deal'

Stephens analyst Brody Preston upgraded Capital Bancorp (NASDAQ: CBNK) from Equal Weight to Overweight with a price target of $28.00 (from $25.00).

The analyst comments "We find the IFHI deal strategically complementary to CBNK’s regional and national branch-lite model that profiles targeted niche vertical expertise and strong risk-adjusted returns. We favor the bolt-on of a niche C&I vertical and differentiated fee-heavy revenue mix that increase the Commercial Bank EPS contribution to 67%, a remix we find multiple-enhancing, while also reducing CRE and Construction concentrations below regulatory guideposts and maintaining well above peer capital ratios. Related deal metrics of 8.9x LTM EPS and 1.07x TBV with dilution of ~5% earned back in 1.8 years alongside EPS accretion of 17% are compelling as well. With CBNK trading 6.5x ‘25E EPS despite a well above peer 1.7% ROA and 92% of ‘25E TBV, in line with peers despite a 15% ROTCE that is ~300bp above peers on ~300bp related excess capital, and a +35% delta to our $28 target, we upgrade CBNK to OW from EW."

For an analyst ratings summary and ratings history on Capital Bancorp click here. For more ratings news on Capital Bancorp click here.

Shares of Capital Bancorp closed at $20.83 yesterday.

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