Market Overview

With Little Remaining Upside Seen For Cathay General Bancorp, BMO Downgrades

Share:
With Little Remaining Upside Seen For Cathay General Bancorp, BMO Downgrades

Cathay General Bancorp (NASDAQ: CATY) shares have gained about 18 percent year-to-date, including a 26-percent gain over the past three months. This prompted BMO Capital Markets to revisit its rating on the shares.

The Analyst

BMO Capital Markets analyst Lana Chan downgraded shares of Cathay General Bancorp from Market Perform to Outperform.

The Thesis

Cathay General Bancorp's fundamentals remain positive but are now fully reflected in the valuation, Chan said in a Thursday note. (See Chan's track record here.) 

The company is on track to produce above-average loan growth in the range of 8 percent-plus in 2017, Chan said. Cathay General Bancorp remains a capital return story, Chan said. 

Apart from the valuation, BMO Capital Markets also predicts there are potential EPS growth headwinds in 2018 and beyond from the normalization of credit costs and interest-bearing deposit betas.

Cathay General Bancorp does not rank high among banks that could substantially benefit from tax reform and regulatory relief, Chan said. 

BMO left its 2017 and 2018 core earnings per share estimates unchanged at $2.44 and $2.65, respectively.

Within its smid-cap bank universe, BMO said it now prefers Signature Bank (NASDAQ: SBNY) and BankUnited (NYSE: BKU).

The Price Action

The stock is inching closer to BMO's $45 price target and trading at a roughly in-line valuation on a forward P/E multiple basis, Chan said. Historically, the stock traded at a 5-7 percent discount, relative to the peer group.

At the time of writing, shares of Cathay General Bancorp were down 1.35 percent at $43.91.

Related Links:

A Leveraged Idea For The December Fed Meeting

While Big Banks Fight Regulations, Fintech Conquers Them

Photo from Wikimedia. 

Latest Ratings for CATY

DateFirmActionFromTo
May 2020SunTrust Robinson HumphreyMaintainsHold
Oct 2019WedbushMaintainsOutperform
May 2018WedbushUpgradesNeutralOutperform

View More Analyst Ratings for CATY
View the Latest Analyst Ratings

 

Related Articles (CATY)

View Comments and Join the Discussion!

Posted-In: BMO Capital Markets Lana ChanAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
HMSYSVB LeerinkMaintains35.0
AAPLWedbushMaintains515.0
NCNOPiper SandlerInitiates Coverage On82.0
NCNOKeyBancInitiates Coverage On90.0
MGAKeyBancMaintains59.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com