UPDATE: Compass Point Downgrades Provident Financial Holdings to Hold Following Strong Run
Compass Point reduced its rating on Provident Financial Holdings (NASDAQ: PROV) from Buy to Neutral but raised its price target to $15.50.
Compass Point said, "PROV reported another strong quarter in September (1Q13) with actual EPS of $0.72 exceeding our expectations of $0.36. The strong performance has primarily been driven by mortgage banking as the traditional community banking environment remains depressed due to low rates, decreased loan demand and significant competition for core lending products. That said, shares now trade at 1.1x BVPS and 14.4x our CY13 EPS estimate, which is in line with our long term valuation methodology, and favorable mortgage banking tailwinds appear to be reflected in the share price. Credit quality has improved to a degree that we no longer expect it to be an earnings driver. Without improvement in the core community banking segment, we believe shares will continue to trade on the mortgage banking outlook, which remains positive."
Provident Financial Holdings closed at $15.40 on Monday.
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