UPDATE: D.A. Davidson Initiates Coverage on First Midwest Bancorp with Buy Rating, $15.50 PT on Improved Profitability

In a report published Friday, D.A. Davidson analyst Stephen Geyen initiated coverage on

with a Buy rating and $15.50 price target. In the report, D.A. Davidson noted, “Our year-end 2014 (4Q'14) forecast ROA of 1.00% is very close to the D.A. Davidson Mid-cap bank peer median of 1.06% and, as a result, we are applying a peer P/E multiple of 14.5x our 2014 estimates to derive our price target. We believe management continues to make significant progress to bring down operating expense, reduce credit costs, and drive revenue growth. By our estimate, operating expense is projected to decline 5.7% in 2013, fee income is projected to increase 12.9%, and loan growth is likely to be in the mid- to high-single digits.” First Midwest Bancorp closed on Thursday at $12.90.