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