New York Community Bancorp (NYSE: NYCB) stock plummeted over 6% on Thursday following a rating downgrade from an analyst at DA Davidson.
New York Community Bancorp (NYCB) saw a change in market perspective on Thursday when DA Davidson altered its rating on the company’s stock. The firm downgraded NYCB from Buy to Neutral and revised its price target downwards to $5.00 from the earlier $8.50. This reassessment by the firm is in response to recent developments that could potentially impact the bank’s financial stability.
A mix of factors drove the downgrade, including a recent announcement from the bank showing a substantial increase in total deposits to $83 billion as of February 5, 2024, compared to the end of the last year. Furthermore, the bank disclosed a total liquidity of $37.3 billion, which exceeds the volume of uninsured deposits held, demonstrating a coverage ratio of 163%.
Despite these seemingly positive signs, Moody’s (NYSE: MCO) downgraded the bank to junk status, and worries about its exposure to commercial real estate (CRE) have been voiced.
DA Davidson posits that these issues could result in potential deposit outflows in the future. The analysis also recognizes that while NYCB has shown a readiness to divest non-strategic assets to accumulate capital, such actions may not sufficiently mitigate the risk of deposit withdrawals.
The firm observes that the current trading patterns of NYCB’s shares do not mirror the bank’s fundamentals, as shown by a price-to-tangible book value (P/TBV) ratio of 0.45X. This observation prompts the decision to lower the price target and adjust the stock’s rating.
NY Community Bancorp (NYSE: NYCB) Stock Reaction
NYCB stock plunged 6.47% to close at $4.19 on Thursday. The traders had exchanged hands with 62,609,647 (62.60 million) shares compared to the average daily trading volume of 19.06 million.
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