UPDATE: D.A. Davidson Downgrades MB Financial on Valuation
In a report published Tuesday, D.A. Davidson analyst Stephen Geyen downgraded the rating on MB Financial (NASDAQ: MBFI) from Buy to Neutral, but reiterated the $30.00 price target.
In the report, D.A. Davidson noted, “We believe MBFI is uniquely positioned to perform quite well on a relative basis if management can successfully grow loans at a mid-single digit pace. Mid single digit loan growth would likely support a NIM near the 3.50% range and drive modest net interest income growth, if cash flows from the securities portfolio are put to work in higher yielding commercial loans. Furthermore, the investment in corporate services over the past several quarters, and the lease business, is likely to contribute to solid growth in fee income vs. peers. Fee income was 34% of revenue at 1Q13 vs. 28% last year at MBFI. We note that mortgage banking is not meaningful to total revenue, as a result, revenue will not be adversely impacted by a drop in mortgage refinance; potentially driving relative strength in MBFI's profitability ratios.”
MB Financial closed on Monday at $28.53.
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