UPDATE: J.P. Morgan Moves to Neutral on Umpqua Holdings on Limited Value Creation Opportunity

In a report published Tuesday, J.P. Morgan analyst Steven Alexopoulos moved the rating on Umpqua Holdings UMPQ from Not Rated to Neutral, and raised the price target from $12.50 to $16.00.

In the report, J.P. Morgan noted, “Following a period of restriction on UMPQ, we are moving from a not rated designation to a Neutral rating with a December 2014 price target of $16 (previously a Neutral rating and December 2013 $12.50 price target). While worry about many banks sitting on excess capital doing acquisitions that check the box of deploying capital but don't necessarily check the box of generating sufficient shareholder returns, UMPQ is not one of them. In fact, the most recent transaction (for Financial Pacific Holding) not only helped to deploy excess capital but was also (and more importantly) a nice generator of value for shareholders owing to double digit EPS accretion (in the first full year) and TBV earn back of 4 years. Although the transaction is small in size at $279 million in assets the earnings accretion implies a much larger transaction. While we think shareholders are in good hands with Umpqua management, the issue is that the value creation opportunity from deals appears limited given a lack of supply of attractively priced opportunities. Case in point, the last transaction announced by the company was in June 2010 (Nevada Security Bank).”

Umpqua Holdings closed on Monday at $15.95.