UPDATE: Sterne Agee Upgrades Popular to Buy on Credit Leverage Catalyst

Sterne Agee raised its rating on Popular

from Neutral to Buy with a $26 price target. Sterne Agee commented, "BPOP's story has improved considerably from the problems that beset it in recent years, including problem asset inflow and associated reserve build that adversely affected the company from 2010 to 2011. At this stage, the underlying catalyst is centered on credit leverage, including 1.7x reserve coverage of annualized NCOs, 47% coverage of NPLs, and Puerto Rico's lag in housing values relative to the U.S. While the potential for further increases in problem asset formation appears limited and NPAs remain exceptionally high, the inflection point for credit is near in our view." Popular closed at $21.73 on Wednesday.