UPDATE: D.A. Davidson & Co. Upgrades Sterling Financial Corporation Tying Valuation to Acquirer
In a report published Friday, D.A. Davidson & Co. analyst Jeff Rulis upgraded the rating on Sterling Financial Corporation (NASDAQ: STSA) from Neutral to Buy, and raised the price target from $30.52 to $35.60.
In the report, D.A. Davidson & Co. noted, “On September 12th, the bank announced an agreement to be acquired by Umpqua Holdings Corporation (UMPQ* – BUY - $16.85). STSA shareholders will receive 1.671 shares of UMPQ in addition to $2.18 in cash for each share of STSA. To better align our rating and price target with that of the acquirer, we are upgrading STSA shares to BUY from Neutral with a $35.60 price target (up from $30.52). The new target represents 1.671x our UMPQ price target (of $20) in addition to $2.18 in cash per share. STSA reported Q3'13 EPS of $0.33, eight cents below our and the Street's estimate of $0.41. Relative to our model, the miss was driven by a steeper than expected decline in the mortgage business and higher merger-related expenses.”
Sterling Financial Corporation closed on Thursday at $29.66.
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