Analyst upgrades First Commonwealth to 'Neutral' following slide in share price
Associated Press
08/26/09 8:00 AM EDT
NEW YORK — A Janney Montgomery Scott analyst upgraded First Commonwealth Financial Corp. to "Neutral" from "Sell" Wednesday after a recent drop in its stock price.
The bank's shares have dropped 12 percent since it released second-quarter results and cut its dividend in late July. That brings the stock close enough to analyst Rick Weiss' estimate of its fair value to prompt an upgrade, he wrote in a note to investors Wednesday.
First Commonwealth also has plenty of capital, and slashing its dividend 75 percent, to 3 cents a share, was a smart cash-saving move, he said.
Still, Weiss said investors shouldn't expect a profit this year as the bank focuses on fixing its balance sheet. Nonperforming loans grew 49 percent from the first quarter to the second, he said, and First Commonwealth will likely have to increase the cash it sets aside to counter loan losses.
He expects a loss of 16 cents per share for 2009 and a profit of 16 cents per share in 2010.
Shares of First Commonwealth finished Tuesday's trading at $6.11.
