Ahead Of The Bell: Popular Downgraded

NEW YORK (AP) — B. Riley downgraded Puerto Rico-based banking company Popular Inc. late Tuesday, saying a recent stock surge has left shares "fairly priced" ahead of the losses he anticipates through 2010.

Shares of Popular, parent of Banco Popular, have risen 41.6 percent since it announced it completed an exchange of $935 million of Treasury-owned preferred shares to trust preferred securities on Aug. 25, said analyst Joe Gladue in a note to investors.

The previous week, Popular had swapped preferred shares for nearly 358 million newly issued common shares. Popular needed to raise common equity capital in order to accommodate the more adverse economic and credit scenarios assumed in the U.S. government's "stress tests" of financial institutions in spring.

Gladue had upgraded Popular on Aug. 12 in anticipation of the exchange offer. Popular closed at $2.35 on Tuesday, exceeding Gladue's $2 price target.

While Popular is capable of earning more than $300 million a year when the U.S. and Puerto Rico economies recover, but that won't likely happen before 2012, he said.

He sees a loss of $1.66 per share this year and a loss of 67 cents per share in 2010.