Cantor Fitzgerald Downgrades First BanCorp (FBP) to Sell; Better Credit Quality, But Muted Earnings Outlook
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Price: $29.70 +1.05%
Rating Summary:
8 Buy, 3 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
8 Buy, 3 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Cantor Fitzgerald downgraded First BanCorp (NYSE: FBP) to Sell with a price target of $3.25.
Cantor analyst said, "First BanCorp reported a 3Q:11 net loss of ($1.46) per share, versus consensus of ($1.94). Credit quality improved, and, with the 10/7/11 closing of its re-capitalization, First BanCorp now has capital to support growth (12.8% Tier 1 Common ratio, versus the 7% Basel III guideline). However, our new 2012 EPS estimate is not sufficient to support the current stock price. We are downgrading to SELL. In 3Q:11, nonperforming assets (NPAs) were down 1% (though to a still-very-high 12.2% of loans) and net charge-offs were down 15%, enabling lower loan loss provisioning (down 22%). We expect credit quality to continue to improve, but to remain an issue throughout 2012. Without sufficient capital, First BanCorp has been de-leveraging and not pursuing new business. Now, First BanCorp has the ability to grow. However, management is (understandably) reluctant to load up on low-yielding securities, and the Puerto Rico economy presents as many opportunities to shrink loans (NPAs, construction loans) as to grow loans (auto loans, commercial loans), in our view."
For more ratings news on First BanCorp click here and for the rating history of First BanCorp click here.
Shares of First BanCorp closed at $3.75 yesterday.
Cantor analyst said, "First BanCorp reported a 3Q:11 net loss of ($1.46) per share, versus consensus of ($1.94). Credit quality improved, and, with the 10/7/11 closing of its re-capitalization, First BanCorp now has capital to support growth (12.8% Tier 1 Common ratio, versus the 7% Basel III guideline). However, our new 2012 EPS estimate is not sufficient to support the current stock price. We are downgrading to SELL. In 3Q:11, nonperforming assets (NPAs) were down 1% (though to a still-very-high 12.2% of loans) and net charge-offs were down 15%, enabling lower loan loss provisioning (down 22%). We expect credit quality to continue to improve, but to remain an issue throughout 2012. Without sufficient capital, First BanCorp has been de-leveraging and not pursuing new business. Now, First BanCorp has the ability to grow. However, management is (understandably) reluctant to load up on low-yielding securities, and the Puerto Rico economy presents as many opportunities to shrink loans (NPAs, construction loans) as to grow loans (auto loans, commercial loans), in our view."
For more ratings news on First BanCorp click here and for the rating history of First BanCorp click here.
Shares of First BanCorp closed at $3.75 yesterday.
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