First Niagara Financial Worth Near $13 In Sale, Compass Point Analyst Says

• The share price of First Niagara Financial Group, Inc. FNFG has increased 21.12 percent, year to date, reaching a high of 10.365 on September 25.
• Laurie Havener Hunsicker of Compass Point has initiated coverage of First Niagara with a Buy rating and a price target of $12.
• Hunsicker believes that the stock could be valued at about $13 in a takeout scenario, representing 27 percent upside, and that the likelihood of a sale has increased.

According to the Compass Point report, “At a time when acquirers are seeking deposit-rich franchises, FNFG offers an attractive footprint with a clean balance sheet and a desirable loan/deposit ratio of 82 percent.”

The company is also an attractive acquisition target given its various “missteps,” high infrastructure spend and the current rate environment, especially for an acquirer who is able to trim First Niagara’s “outsized 70 percent efficiency ratio.”

Analyst Laurie Havener Hunsicker also expressed confidence in the ability of the five experienced bank directors to sell banks, and believes that “due to likely increasing board fatigue… a sale is/or will be actively considered unless FNFG can earn its path to independence.”

In addition, the target returns, which had been outlined by First Niagara’s CEO in February 2014 are not even close to being achieved.