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Will New Hires And Expanded Services Offset Cash Outflows At Boston Private Financial?

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BMO Capital analyst Lana Chan reiterated a Market Perform rating on Boston Private Financial Hldg Inc (NASDAQ: BPFH). The analyst has 12-month price target of $12, based on forward P/E multiple of "15xour revised 2017 EPS estimate," which was discounted back by 10 percent for half a year.

The brokerage expects the management's focus to continue to be on net AUM flows. The company indulged in fresh hiring of team and also boosted its service to its existing clients with a view to compensate outflows. Chan sees noninterest expenses to drop close to $64 million from $66.7 million in the preceding quarter. That was mainly due to weaker seasonal personnel expenses. Also, the first quarter results included restructuring costs of $1.1 million.

"We are assuming the net interest margin falls 5-bp linked quarter to 2.91%, partly due to elevated interest recoveries last quarter (+4 bp) and a flatter yield curve," the analyst sadi in a research note.

The analyst expects Boston Private Financial to deliver earnings of $0.17 in the second quarter, which is less by a penny from the consensus. The brokerage attributed it to an increased LLP of $2.1 million compared to $0.2 million predicted by the consensus reflecting the expected loan growth, as well as, modest NCOs.

Going forward, Chan expects BPFH to face headwinds in earnings in 2018 due to the expiry of its revenue share deal with Westfield Capital Management. "Longer term, we still view BPFH as an acquisition candidate given its focus on the high-net-worth market, with a significant asset management business (~$27 billion in AUM) and bicoastal footprint," the analyst concluded.

On Wednesday, the stock advanced 1 percent to $11.51.

Latest Ratings for BPFH

DateFirmActionFromTo
May 2020SunTrust Robinson HumphreyMaintainsHold
May 2020Keefe, Bruyette & WoodsDowngradesOutperformMarket Perform
Apr 2020WedbushInitiates Coverage OnNeutral

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Posted-In: BMO Capital Markets Lana ChanAnalyst Color Reiteration Analyst Ratings

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