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This Chicago Bank Stock Has 17% Upside, Says KBW

After PrivateBancorp announced its third-quarter results, McGratty on Oct. 17 upgraded the stock to "outperform," from "market perform," even though the stock was already up 55% year-to-date, writing in a client note that the upgrade reflected was "based on a belief that both loan growth and EPS growth will be above average over the next several years and the current discounted valuation does not fully capture this growing reality."  McGratty's price target of $28 in October was based on a multiple of 14 times his 2015 EPS estimate, which was a similar valuation to the KBW Regional Banking Index.

McGratty on Wednesday raised his price target for PrivateBancorp to $32, "which applies a more growth-like multiple of 16x to our newly established (and discounted) [2016 earnings estimate] of $2.20/share."  KBW's EPS estimates for PrivateBancorp are $1.60 for 2014 and $1.95 for 2015.

Bringing estimates back to 2015, PrivateBancorp trades at a forward P/E multiple of 14, which is a discount to the 14.7 multiple for the KBW Regional Banking Index, but the market "is currently in process of revaluing PVTB from a credit stock to a growth stock again," now that the bank's credit woes have been left behind, according to the analyst.

Interested in more on Private Bancorp? See TheStreet Ratings' report card for this stock.
PVTB Chart PVTB data by YCharts

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-- 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 TheStreet.com 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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