UPDATE: Stifel Nicolaus Upgrades United Financial Bancorp to Buy on Margin Stability

Stifel Nicolaus raised its rating on United Financial Bancorp UBNK from Hold to Buy and established a $16 price target on shares. Stifel Nicolaus said, "We are raising shares of UBNK to Buy from Hold and initiating a $16.00 target price, implying potential total return of 19% (inclusive of 2.9% dividend yield). Coming out of a strong 2Q12, we increased our earnings estimates for United to reflect relative margin stability and core expense reductions. While the dilution taken to finance the deal is meaningful, the pending acquisition of NEBS should accelerate financial improvement to drive United closer to a 1.00% ROA. We believe that shares of UBNK should trade closer to 118% of 2013E tangible book value versus 102% (of 2013E) currently to reflect premium ROA and increasing franchise value." United Financial Bancorp closed at $13.82 on Thursday.