Wall Street Just Upgraded This Stock, and I Think There's More Room to Grow
Valley National Bancorp (NASDAQ: VLY) recently announced it was acquiring the U.S. subsidiary of Bank Leumi Le Israel (OTC: BLMIF), a move that will grow the New Jersey-based bank to more than $50 billion in assets. The announcement prompted an analyst at Citigroup to upgrade Valley National's stock from a sell rating to neutral, while raising his price target by more than 16% to $14 per share.
While the upgrade is nice to see, I think this acquisition is very exciting for Valley National and could translate to even more upside long-term. Here's why.
By the numbers, this deal is decent, although nothing extraordinary. Valley National plans to pay about $1.15 billion for Bank Leumi USA in a mostly stock transaction that values the subsidiary at 130% tangible book value (TBV)(what a bank would be worth if it were immediately liquidated). Valley National plans to eventually take out close to 33% of Leumi's expense base. The deal will dilute Valley National's TBV minimally, with less than a one-year earn-back period, and the deal will boost earnings by roughly 7% in 2023 once all of the cost savings are phased in.
Source Fool.com
