Raymond James downgrades United Community Banks stock rating to Market Perform

Investing.com - Raymond (NSE:RYMD) James downgraded United Community Banks (NYSE:UCB) from Outperform to Market Perform on Tuesday, citing limited catalysts for near-term outperformance. According to InvestingPro data, UCB maintains a GOOD financial health score and trades at a P/E ratio of 13.5x, with revenue growing 12% over the last twelve months.

The downgrade reflects Raymond James’ view that management is less likely to pursue further merger and acquisition transactions in the near term, which limits the bank’s ability to improve its below-peer profitability.

Raymond James believes this lack of M&A activity will result in UCB shares continuing to trade at a discount to peers, despite positive factors such as the company’s focus on organic growth and resumption of share repurchases.

The firm noted that UCB shares have underperformed the SPDR S&P Regional Banking ETF (KRE) year-to-date, falling 1.8% compared to KRE’s 5.7% gain.

Raymond James sees few catalysts that could drive UCB shares to outperform in the near term, leading to the more cautious Market Perform rating.

In other recent news, United Community Banks reported first-quarter 2025 earnings that exceeded analyst expectations, with earnings per share of $0.59 compared to a forecast of $0.56. The company’s revenue also surpassed projections, reaching $247.68 million against the expected $247.09 million. Raymond James has adjusted its price target for United Community Banks from $30.00 to $32.00, maintaining an Outperform rating, following discussions with the bank’s executives about its solid loan growth and strategic acquisitions. United Community Banks has been active in mergers and acquisitions, with six bank acquisitions announced since 2020, and the integration of American National Bank scheduled for May 1. The bank’s credit quality remains stable, with benign credit metrics and improving trends, particularly with Navitas. In addition to these developments, United Community Banks has been managing its deposit growth effectively, boasting a lower loan-to-deposit ratio compared to peers. Meanwhile, UCB SA received an upgrade from BofA Securities, moving from Neutral to Buy, due to the strong growth potential of its Bimzelx treatment. BofA raised its price target to EUR225.00, citing increased U.S. prescription rates and positive sales estimates for Bimzelx.

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