FBR claimed that SNV wouldn't be profitable this year as management claimed and that the bank wouldn't likely be bought out. Not really sure who would buy an unprofitable regional bank on a buyout hopes other then small retail investors. The whole reason to buy SNV is that they trade very cheaply compared to normalized earnings (see Tom Brown for more detail).
With the economy turning and the real estate sector likely bottoming out, I'm not sure why FBR is so eager to fight the trend. Clearly management at SNV is too be questioned so I think the fact that it only trades at $3.25 now confirms that concern. This downgrade is likely to be seen as a buying opportunity down the road. It smacked the stock right back to the 20EMA where it should be aggressively bought.
- Paul J. Miller of FBR Capital Markets cut his rating of Synovus to "Underperform" from "Market Perform."
- Miller wrote that he puts "low odds" on such an outcome. He expects continued erosion in tangible book value for Synovus, based in Columbus, Ga.
- Miller attributed the rise to expectations that Synovus would turn a profit at some point this year, and speculation that the bank might be bought out.
- "While not completely out of the question, we do not see this scenario as highly likely," Miller wrote, saying that other banks may be more attractive acquisition targets.