Will This Upgrade Help BankUnited (BKU) Today?

Story updated at 10 a.m. to reflect market activity.

NEW YORK (TheStreet) -- BankUnited (BKU) was upgraded to "overweight" from "equal-weight" by Morgan Stanley Thursday.

Shares of BankUnited gained 1.1% to $34.27 in morning trading.

Morgan Stanley analysts set a price target of $39 for the regional bank. The analysts said BankUnited's stock appears undervalued given its potential for growth.

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Separately, TheStreet Ratings team rates BANKUNITED INC as a Hold with a ratings score of C+. TheStreet Ratings 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, good cash flow from operations and solid stock price performance. 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:

  • 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, BKU's net profit margin of 26.93% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 62.73% to -$24.30 million when compared to the same quarter last year. Despite an increase in cash flow of 62.73%, BANKUNITED INC is still growing at a significantly lower rate than the industry average of 394.92%.
  • BKU, with its decline in revenue, slightly underperformed the industry average of 11.7%. 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.
  • 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 9.9% in earnings ($1.81 versus $2.01).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of 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

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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