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First Niagara: Financial Winner

Guggenheim Securities analyst David Darst says his firm was waiting for the first-quarter earnings report to upgrade First Niagara, following Koelmel's ouster. The analyst on Monday upgraded his rating for the lender to a "buy" rating from a neutral rating, with a price target of $10.50.

"The whole name of the game has been that people have been uncomfortable with the CEO, Darst says. "We have had negative estimate revisions consistently over the past year," but with the change in leadership, the analyst expects "a more balanced approach to achieving profitability improvement and managing growth.

Following First Niagara's string of acquisitions, "we are at a point now when earnings are stabilizing, and premium amortization on [discounted] acquisitions [can be] set against revenue declines," Darst says, adding that "if they continue to grow with some operating leverage, investors will be more comfortable with the story and multiples will expand back to peer levels."

First Niagara's shares trade for 11.6 times the consensus 2014 earnings estimate of 80 cents a share, among analysts polled by Thomson Reuters.

According to Darst, the average forward price-to-earnings ratio for First Niagara's banking peers is 12.5 to 13.0 times forward earnings.

COF Chart COF data by YCharts

Interested in more on First Niagara? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.


Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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