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Investing.com - DA Davidson reiterated its Buy rating and $14.50 price target on Flagstar Bank (NYSE:FLG) Wednesday, despite recent share price pressure related to New York City politics. The $4.45 billion market cap bank currently trades at $10.69, with analyst targets ranging from $12.50 to $15.50. According to InvestingPro data, the stock appears fairly valued based on its proprietary Fair Value model.
The bank’s stock has fallen 12% over the past two weeks as Zohran Mamdani won the Democratic mayoral primary in New York City, according to DA Davidson. Mamdani, who had been closing the gap on Andrew Cuomo during the campaign, has promised to "freeze rents" on rent-regulated apartments if elected. InvestingPro analysis shows the bank’s financial health score is currently rated as ’WEAK’, with analysts anticipating sales decline in the current year.
The firm noted that while there is no guarantee Mamdani will win the general election on November 4, his potential policies represent a negative for Flagstar Bank. The primary risk would be that FLG might need to increase its reserves if the rent freeze policy is implemented.
DA Davidson calculated that every $100 million increase in reserves would negatively impact earnings per share by approximately $0.15 and reduce the CET1 ratio by about 10 basis points. Despite these potential headwinds, the firm believes the recent selloff is overdone.
The investment firm cited Flagstar’s current valuation at 0.6 times price-to-tangible book value and its "top tier CET1" capital ratio as factors supporting its continued Buy recommendation and unchanged $14.50 price target. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of the bank’s financial metrics, peer comparisons, and future prospects.
In other recent news, Flagstar Financial Inc. reported a narrower-than-expected loss for the first quarter of 2025, with an adjusted net loss of $0.23 per share, surpassing analyst expectations of a $0.28 loss. Revenue for the quarter was $490 million, which fell short of the $510.44 million forecast. Jefferies recently initiated coverage of Flagstar Bank with a Buy rating and a price target of $15.00, citing improvements in credit quality and operational efficiency. DA Davidson also maintained a Buy rating with a $14.50 target, expressing confidence in the bank’s strategic direction and potential profitability by the fourth quarter of 2025. Additionally, Citi raised its price target for Flagstar Bank to $15.50, affirming a Buy rating, and noted the bank’s legal actions against Pinnacle Group as a positive step towards loan recovery. Flagstar Financial also held its annual shareholder meeting, where the election of directors and the appointment of KPMG LLP as the accounting firm were ratified. These developments reflect a period of strategic adjustments and optimistic projections for Flagstar’s future performance.
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