Citi Double Downgrades Bank OZK (OZK) to Sell

Citi analyst Benjamin Gerlinger downgraded Bank OZK (NASDAQ: OZK) from Buy to Sell with a price target of $37.00 (from $57.00).

The analyst comments "Bank OZK has been instrumental in the development of high-dollar commercial real estate projects throughout the United States for multiple decades. The company has had its name associated with skyline altering commercial development projects, with minimal total loss content. However, we have newfound, but substantial concerns with what we believe to be OZK’s largest individual loan (totaling $915M), a multi-use project in Atlanta (“Echo Street West”; $135M Loan), and Life Science construction lending in general (which is largely idiosyncratic to OZK vs peer banks). Together these two loans account for 3.8% of non-purchased loans; 8.1x larger than the entire ACL for construction loans. When thinking about a share price valuation, we juxtaposed OZK’s healthy PPNR outlook against its tightening capital levels and compounding credit concerns. Ultimately, we believe a share price of $37.00 (down from $57.00) is appropriate, and as such, we downgrade our rating to Sell."

For an analyst ratings summary and ratings history on Bank OZK click here. For more ratings news on Bank OZK click here.

Shares of Bank OZK closed at $46.19 yesterday.

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