Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
On Friday, Citi analysts, led by Ben Gerlinger, upgraded Flagstar Bank (NYSE:FLG) stock from Neutral to Buy, increasing the price target to $15.00, up from the previous $13.50. The upgrade reflects confidence in the bank’s strategic operational plan following its recapitalization efforts last year. The $4.47 billion market cap bank has shown resilience with a 15.75% year-to-date return, despite trading at $10.79, which InvestingPro analysis suggests is near its Fair Value.
Flagstar Bank’s strategy is focused on achieving credit stability and eventually improvement, reducing funding costs and operational expenses, and growing through a national commercial and industrial (C&I) effort. Citi’s analysts have engaged in multiple discussions with the bank’s management and conducted extensive credit due diligence, which has led to a high degree of confidence in the bank’s ability to execute the first two components of its three-part strategy more effectively than the market consensus.
The analysts’ outlook is further bolstered by the expectation of positive earnings per share (EPS) by the fourth quarter of 2025. They anticipate that the shares will begin to trade at a valuation closer to tangible book value (TBV) as the bank’s strategic initiatives take effect.
The rating now stands at Buy (High-Risk), with the revised 12-month target price reflecting an increase of $1.50. This adjustment by Citi signals a positive perspective on Flagstar Bank’s future performance and its potential for profitability ramp-up.
In other recent news, Flagstar Bank has caught the attention of several analysts with its recent financial developments. DA Davidson has upgraded Flagstar Bank’s stock rating from Neutral to Buy, raising the price target to $14.50 from $12.00. This change follows a review of the bank’s improved capital and credit conditions, highlighted by a significant increase in its Common Equity Tier 1 (CET1) ratio. Similarly, Citi analysts have adjusted their price target for Flagstar Bank to $13.50, maintaining a Neutral rating while revising their earnings estimates for 2025 and 2026. They now anticipate a reduced loss for 2025 and increased earnings for 2026, attributing this to better credit conditions and funding costs.
Keefe, Bruyette & Woods have also reiterated a Market Perform rating with a $13.50 target, reflecting confidence in the bank’s ongoing efforts to stabilize and diversify its operations. Flagstar Bank has been actively addressing its capital issues by divesting parts of its mortgage business, which has bolstered its capital position. The bank’s allowance for credit losses has improved, and it has managed to reduce its nonperforming loans. Analysts have noted that these strategic moves are pivotal in Flagstar Bank’s transformation and return to profitability. These developments suggest a more stable financial outlook for the bank, although some analysts still advise caution due to potential risks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.