Ahead Of The Bell: Whitney Holding Upgraded

NEW YORK (AP) — An analyst raised her rating on regional banking operator Whitney Holding Corp. based on earnings potential once the financial sector fully recovers.

SunTrust Robinson Humphrey analyst Jennifer Demba upgraded the stock to "Buy" from "Neutral" and set a $14.50 price target.

Shares of Whitney closed Friday at $8.73.

In a research note, Demba said that while New Orleans-based Whitney is likely to post losses in 2009 and 2010, its low cost of funding operations will provide upside once problem loans are worked out. The bank also has enough reserves to cover any additional loan losses without have to raise additional money, she wrote.

Nearly all banks have struggled with mounting loan losses during the credit crisis and recession. The bulk of Whitney's loan problems have come from its operations in Florida, which was among the hardest hit states by the downturn in the housing and real estate markets.

Once the bank's loan-losses stabilize, Demba said normalized earnings should range between 89 cents and $1.52 per share, with a base case for earnings of $1.20 per share.

Despite the upgrade, Demba increased her loss estimates for 2009 and 2010. Demba now expects Whitney to lose $1.39 per share in 2009, compared with a previous loss estimate of $1.29 per share.

Demba expects Whitney to lose $90 cents per share in 2010. She previously estimated a loss of 71 cents per share.