KBW: Sell New York Community Bancorp, 'Further Risk' In Store

In a report published Wednesday, Keefe, Bruyette & Woods analyst Collyn Gilbert downgraded the rating on

from Market Perform to Underperform, while maintaining a price target of $15.50. New York Community Bancorp's shares have continued to appreciate in recent years, despite the company's flat earnings and poor interest rate profile as well as other headwinds. Analyst Collyn Gilbert believes that the recent upturn in shares was overdone. "We think NYCB shares have outperformed more on perceived positive catalysts, versus actual ones." Several potential headwinds create risks for the company, acting as probably downside for the company's share price. In the report Keefe, Bruyette & Woods noted, "We think there are a variety of potential headwinds that could negatively impact NYCB's overall earnings and valuation profile." Potential risks include uncertain M&A targets, an operating environment that is not perfect, lower-than-expected relief from the Shelby Bill and expectations that the company would generate relatively flat earnings growth over the next two years. Gilbert pointed out that fulfilling the potential requirements tied to LCR could cost New York Community Bancorp around $0.02 in EPS, while adding that a 200 bps rise in the Fed's rate could erode the company's net interest income by nearly 9 percent, as compared to around 4.2 percent for the regional bank peers.