Will This Upgrade Help PacWest Bancorp (PACW) Stock Today?

NEW YORK (TheStreet) -- PacWest Bancorp (PACW) stock has been upgraded to "buy" with a $47 price target, DA Davidson said Monday. The firm said the company will likely make more acquisitions to augment growth. 

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Separately, TheStreet Ratings team rates PACWEST BANCORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate PACWEST BANCORP (PACW) a BUY. This is driven by a number of 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 revenue growth, increase in net income, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 26.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 85.9% when compared to the same quarter one year prior, rising from $13.49 million to $25.08 million.
  • Net operating cash flow has slightly increased to $27.24 million or 5.48% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -43.02%.
  • The gross profit margin for PACWEST BANCORP is currently very high, coming in at 98.14%. 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 27.41% trails the industry average.
  • Powered by its strong earnings growth of 54.05% and other important driving factors, this stock has surged by 41.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
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