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UBS Says BankUnited's Earnings View Cloudier Now

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Following the lowering of loan growth forecast by BankUnited (NYSE: BKU), UBS said the forward outlook for the bank is now less certain. Nevertheless, the firm believes the 2016 consensus estimate is achievable.

With loan growth, BankUnited's primary earnings driver, shrinking, UBS Bank analyst David Eads said headwinds from the shrinking acquired portfolio may force earnings growth outlook closer to its peers. This is despite the firm continuing to believe the bank will show above-average loan growth, as management is adept at making tactical shifts on near term earnings.

UBS believes the company may be forced to change course, weighed down by aggravation of headwinds such as thin spreads, regulatory scrutiny and an uncertain macroeconomic environment.

Specifically, UBS targets a slight acceleration in loan growth in the second half of 2016 from that in the first half. For 2017, the brokerage estimates about $4 billion in growth.

UBS raised its 2016 earnings per share estimate for BankUnited, premised on the second quarter beat and very modest impact of the slowing loan growth this year. However, the firm lowered ts 2017 earnings per share estimate to $2.40 from $2.55.

Haziness concerning earnings outlook forced UBS to lower valuation multiple by slightly over one turn to 14 times. Along with the revised 2017 earnings per share estimate, UBS lowered its price target for BankUnited shares to $34 from $40 but maintained its rating at Buy.

Latest Ratings for BKU

DateFirmActionFromTo
Oct 2019MaintainsEqual-Weight
Sep 2019Initiates Coverage OnBuy
Apr 2019DowngradesOverweightUnderweight

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Posted-In: David Eads UBSAnalyst Color Price Target Analyst Ratings

 

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