TD Cowen analyst Janet Lee upgraded Flagstar Bank (NYSE: FLG) from Hold to Buy with a price target of $18.00 (from $15.00).

The analyst comments: “We believe FLG’s earnings recovery is becoming increasingly durable, supported by multiple structural B/S repositioning tailwinds. $12B of multifamily and CRE loans yielding <3.8% are expected to either reset/mature through 2027, with proceeds reinvested into higher-spread C&I loans (SOFR +225-240 bps). After 2+ years of contraction, we expect loan growth to inflect in 2Q26, led by building C&I momentum with 10%+ q/q growth (~$1.8B), marking a return to B/S expansion. Further, FLG should also benefit from wholesale funding reduction and quarterly repricing of ~$5B of high-cost CDs (~25 bps lower in 2Q26). After years of aggressive upward deposit pricing, FLG’s IBD costs are well above market at 3.13% in 1Q26 (vs. peers at ~2.6%), which we see as supporting less pronounced pricing pressure vs. peers in a higher rate backdrop. Collectively, we see these structural B/S mix improvements as driving strong NIM and NII expansion over the medium term. To that end, we see NIM expanding from 2.15% in 1Q26 to ~2.50% by 4Q26 and ~2.85% by 4Q27, with 15% NII growth for 2026 and 27% for 2027.”

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Shares of Flagstar Bank closed at $14.59 yesterday.