NEW YORK (TheStreet) -- Credit Suisse upgraded BankUnited (BKU) to "outperform" from "neutral" with a $37 price target. The firm said the bank offers industry-leading growth and deserves a higher multiple.
TheStreet Ratings team rates BANKUNITED INC as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate BANKUNITED INC (BKU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.7%. Since the same quarter one year prior, revenues fell by 12.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for BANKUNITED INC is currently very high, coming in at 81.02%. Regardless of BKU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 26.93% trails the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- BANKUNITED INC's earnings per share declined by 18.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, BANKUNITED INC reported lower earnings of $2.01 versus $2.06 in the prior year. For the next year, the market is expecting a contraction of 9.4% in earnings ($1.82 versus $2.01).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has decreased by 16.2% when compared to the same quarter one year ago, dropping from $62.50 million to $52.39 million.
- You can view the full analysis from the report here: BKU Ratings Report