Sterne Agee Maintains Buy, $11 Target on First Niagara Financial

Sterne Agee reiterates its Buy rating and $11 price target on First Niagara Financial Group, Inc. FNFG as shares are seen as attractive compared to high ROE peers. Sterne Agee notes, “The company will issue $450 mil. of common equity, $350 mil. in preferred stock and $300 mil. of subordinated debt. To preserve capital, the company will cut the dividend in half to $0.32 per share. We believe the deal was being marketed after hours in the $8.25 - $8.50 range and will be priced at the high end of $8.50 per share. In our view, the benefit of a much smaller common equity raise (original estimate was $800 mil.) is partially offset by the reduced common dividend and yield support to the story. The shares will still provide a healthy 4% yield at a potential $8.50 offering price.” FNFG closed at 9.01 per share on Tuesday.