NEW YORK (TheStreet) -- New York Community Bank (NYCB) - Get Report received a rating downgrade to "underperform" from "market perform" at FBR Capital on Friday. The firm lowered its price target on the stock to $15 from $16.
The downgrade comes on the heels of the financial services' company's acquisition of Astoria Financial (AS), The Fly reports. A 32% dividend cut also led FBR Capital analysts to downgrade their rating on the stock.
The firm believes the company's strategy in acquiring Astoria makes sense, but the $2 billion price tag does not, The Fly continued.
The acquisition was announced on Thursday and afterwards New York Community Bank stock hit its largest intraday decline since August 24, Bloomberg reported.
Additionally, this morning the company announced the pricing of its $650 million common stock offering.
"The company will offer 40,625,000 shares of its common stock at a price to the public of $16.00 per share, and will receive net proceeds of approximately $630.5 million after deducting underwriting discounts and commissions," New York Community Bank said in a statement.
Shares of New York Community Bank are down by 2.25% to $16.48 at the start of trading on Friday morning.
Separately, TheStreet Ratings team rates NEW YORK CMNTY BANCORP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate NEW YORK CMNTY BANCORP INC (NYCB) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for NEW YORK CMNTY BANCORP INC is currently very high, coming in at 71.79%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 25.25% trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.0%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- NEW YORK CMNTY BANCORP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEW YORK CMNTY BANCORP INC increased its bottom line by earning $1.10 versus $1.08 in the prior year. For the next year, the market is expecting a contraction of 2.7% in earnings ($1.07 versus $1.10).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, NEW YORK CMNTY BANCORP INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: NYCB