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Investing.com - Raymond (NSE:RYMD) James initiated coverage on Provident Financial (LON:VANQ) Services (NYSE:PFS) with a Strong Buy rating and a price target of $21.00 on Thursday. The $2.22 billion market cap bank currently trades at 0.83 times book value, suggesting potential undervaluation according to InvestingPro analysis.
The research firm described PFS as a "well-run franchise" that continues to steadily enhance its position and capture market share due to its strong balance sheet and liquidity position.
Raymond James expects the bank to benefit from its recent acquisition of Lakeland, which allows it to make additional investments to further grow the franchise and drive operating leverage.
The firm noted that recent hires at Provident Financial Services have the potential to drive above-trend loan growth, which combined with the bank’s conservative credit culture and tight expense controls, should yield substantial improvements.
These improvements are expected to enhance profitability and cash EPS over time, potentially leading to a better valuation for the financial services company, according to the research firm.
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