Amalgamated Bank AMAL recently offered 6.7 million shares in an IPO priced at $15.50, within the estimated price range of $15 to $17.
With the IPO quiet period expiring, the sell-side is starting coverage of the company.
The Analyst
Raymond James analyst William Wallace initiated coverage of Amalgamated Bank with an Outperform rating and $20 price target.
The Thesis
Amalgamated Bank, a union-owned bank, has seen meaningful improvements in profitability and efficiency metrics thanks to a financial transformation it underwent over the last few years that led to improved credit metrics, significant branch closures, robust core deposit growth and expense rationalization, Wallace said in a Friday note. (See the analyst's track record here.)
The company has recently expanded on the west coast through its first-ever acquisition, the analyst said.
Amalgamated will now pursue a combination of organic growth and M&A-led growth in its pursuit to become the nationwide values-driven bank of choice, he said.
The bank's unique base of labor union, non-profit and political action committee deposits are likely to fare well in a rising rate environment, Wallace said. The New Resource deal could catalyze earnings and aid in market share expansion, he said.
Raymond James estimates non-GAAP EPS of $1.35 for both 2018 and 2019.
"Ultimately, with our expectation for solid balance sheet growth, improving efficiency and a unique funding base that should demonstrate a better-than-peer deposit beta, we view the risk-reward dynamic positively at current valuation levels," Wallace said.
The Price Action
Amalgamated Bank shares have gained 15.8 percent since their Aug. 9 listing.
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