FBR Capital Downgrades Northwest Bancshares, Inc. (NWBI) to Market Perform; Solid Long-Term Outlook, but Fully Valued

FBR Capital downgraded Northwest Bancshares, Inc. (NASDAQ: NWBI) from Outperform to Market Perform.

FBR analyst says, "NWBI did report decent earnings and the company is planning on buying back massive amounts of stock, but we find it difficult for the stock to meaningfully break out above 16x FY12 earnings without significant loan growth. We believe the future is bright for NWBI due to its bank network in the Marcellus Shale region of the Eastern U.S., but we will need to see the company either successfully make an accretive acquisition or a pickup in lending activity before getting constructive on the stock. NWBI recently reported 1Q11 earnings of $0.16, beating the Street estimate of $0.15, while buying back ~3% of shares outstanding. This quarter was very similar to what we have been seeing across the sector: fee income was pressured from legislative and regulatory issues, mortgage banking remained weak, and banks are struggling to grow their loan portfolios. Considering the company is still operating under a formal enforcement action issued in November, we will likely only see share buybacks over the next year versus an acquisition."

For more ratings news on Northwest Bancshares, Inc. click here and for the rating history of Northwest Bancshares, Inc. click here.

Shares of Northwest Bancshares, Inc. closed at $12.49 yesterday.

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