DA Davidson Upgrades Sterling Financial (STSA) to Buy, Sees Full DTA Recovery By Mid 2012
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Price: $1.10 --0%
Rating Summary:
1 Buy, 5 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
1 Buy, 5 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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DA Davidson upgraded shares of Sterling Financial (NASDAQ: STSA) to a Buy rating from its previous rating of Neutral. The firm is also raising its price target from $15 to $20.
The company posted Q3 earnings of $0.18 per share, double the firm's estimate of $0.09 and ahead of the consensus of $0.11. The firm notes that upside due to "A lower loan loss provision, increased mortgage revenue, and reduced operating costs."
NIM rose 3 bps to 3.34 percent while credit costs fell 31 percent from the previous quarter. Loans grew 3 percent annualized as multi family loans increased 22 percent in the quarter. NPAs fell 12.6 percent in the third quarter to $434.7 million, Classified assets fell 17 percent to $103.3 million.
The firm highlights the possibility of a DTA recovery by mid 2012 as its reserve is presently $335 million.
To account for lower provisions, reduced costs, and a fully DTA recovery in 2012, DA Davidson raised its 2011 and 2012 EPS estimates from $0.42 and $1.00 to $0.62 and $6.15. The firm also initiated its 2013 EPS estimate at $1.35.
An analyst at DA Davidson commented on the DTA recovery saying, "The company is hesitant to confirm specific timing of full recovery, but for our modeling purposes we have now included the full recovery by Q3’12. In our view, a significant portion of the recovery is likely to happen within the next 12-18 months which could add more than $5 per share to EPS and book value."
For more ratings news on Sterling Financial click here and for the rating history of Sterling Financial click here.
Shares of Sterling Financial closed at $13.50 yesterday.
The company posted Q3 earnings of $0.18 per share, double the firm's estimate of $0.09 and ahead of the consensus of $0.11. The firm notes that upside due to "A lower loan loss provision, increased mortgage revenue, and reduced operating costs."
NIM rose 3 bps to 3.34 percent while credit costs fell 31 percent from the previous quarter. Loans grew 3 percent annualized as multi family loans increased 22 percent in the quarter. NPAs fell 12.6 percent in the third quarter to $434.7 million, Classified assets fell 17 percent to $103.3 million.
The firm highlights the possibility of a DTA recovery by mid 2012 as its reserve is presently $335 million.
To account for lower provisions, reduced costs, and a fully DTA recovery in 2012, DA Davidson raised its 2011 and 2012 EPS estimates from $0.42 and $1.00 to $0.62 and $6.15. The firm also initiated its 2013 EPS estimate at $1.35.
An analyst at DA Davidson commented on the DTA recovery saying, "The company is hesitant to confirm specific timing of full recovery, but for our modeling purposes we have now included the full recovery by Q3’12. In our view, a significant portion of the recovery is likely to happen within the next 12-18 months which could add more than $5 per share to EPS and book value."
For more ratings news on Sterling Financial click here and for the rating history of Sterling Financial click here.
Shares of Sterling Financial closed at $13.50 yesterday.
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