Fulton Financial Has 'No Expense Relief In Sight,' DA Davidson Says

Fulton Financial Corp FULT, a regional bank with exposure in Pennsylvania, Maryland, Delaware, New Jersey and Virginia, deserves credit for getting "its house in order" but a bullish stance on the stock is warranted at this time, according to DA Davidson.

The Analyst

DA Davidson's Russell Gunther initiated coverage of Fulton Financial's stock with an $18 price target.

The Thesis

Fulton Financial is "playing to its strength" by building a robust risk framework that can support a bank twice of its size, Gunther said in the note. Moreover, a mid-single digit organic loan growth helped drive profitability ratios close to its peers after five years of underperformance.

The company's ongoing growth strategy moving forward is based on a deeper penetration of its existing footprint and gaining exposure to Baltimore, which is void of a meaningful competitor of Fulton Financial's size.

Fulton Financial has seen its expense trends negatively break out versus its peers in 2012 from ongoing compliance costs and regulatory orders, the analyst wrote. Looking forward there is no "expense relief in sight" as FDIC expenses will increase due to charter consolidation and the company will oversee franchise investments in technology.

Price Action

Shares of Fulton Financial were trading lower by 1.1 percent Tuesday afternoon.

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