Raymond James Starts VersaBank (VBNK) at Strong Buy
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Raymond James analyst William Wallace initiates coverage on VersaBank (NASDAQ: VBNK) with a Strong Buy rating and a price target of $15.00.
The analyst commented, "We are initiating coverage of VersaBank shares (VBNK) with a Strong Buy rating, a $15 target price, and a Moderately Aggressive Risk/Wealth Accumulation suitability rating. VersaBank is a Schedule I Canadian bank, headquartered in London, Ontario, with a high growth, uniquely structured, point-of-sale (POS) lending business that should drive profitability and growth nearto mid-term, and a financial technology, cybersecurity-focused, subsidiary that has the potential to drive meaningful valuation upside potential medium- to long-term. Also supporting loan growth and profitability nearer term is a traditional community bank lending business in Ontario, Canada. Furthermore, on the funding side Versa’s technology-based approach to banking has driven a unique funding business through partnerships with accounting firms that handle consumer bankruptcies in Canada, that we believe will support its growth initiatives in Canada while shifting its funding mix out of its higher cost, more brokered business that has historically funded growth. Lastly, we believe management plans to enter the U.S. POS market in the near future which could provide an additional driver of loan growth/profitability metrics. Ultimately, we believe an investor can buy VBNK at a reasonable multiple for traditional lending/funding businesses in Canada and essentially get the upside potential from its DRT Cyber subsidiary for free, making the risk-reward proposition very attractive, in our view."
Shares of VersaBank closed at $11.80 yesterday.
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