UPDATE: D.A. Davidson Upgrades FirstMerit on Solid EPS Growth Outlook

In a report published Wednesday, D.A. Davidson analyst Stephen Geyen upgraded FirstMerit FMER from Neutral to Buy, and raised the price target to $28.00.

In the report, D.A. Davidson noted, “While this was admittedly a messy quarter following the acquisition of Citizens, core results were solid driven by very strong core loan growth and improved credit. Company guidance included a loan pipeline that is the strongest in the history of the bank and annual cost savings from the acquisition that are now likely to be above $59 million. FMER reported 2Q EPS of $0.29, $0.04 below our estimate and $0.02 below the consensus estimate. Results included one-time merger related costs of approximately $0.13 per share. Favorable variances from our forecast included better than expected net interest income, driven by larger than expected accretion on acquired loans, and lower provision for loan loss. This was offset to some degree by a higher effective tax rate vs. our forecast. We put core EPS at an exceptionally strong $0.42.”

FirstMerit closed on Tuesday at $22.30.