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 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. Follow @PhilipvanDoorn
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV