More Downgrades Hit New York Community Bancorp (NYSE:NYCB), Shares Recover Anyway
In what may be one of the most counter-intutive market moves, well, at least today, New York Community Bancorp (NYSE:NYCB) saw shares blast up nearly 15% in the closing minutes of Friday’s trading session. While analysts and credit downgrades have slammed the bank stock thoroughly, one major positive movement is calling investors back to the table.
Thursday saw the third consecutive credit downgrade hit New York Community, as Morningstar joined in the credit cutting frenzy started by Moody’s and carried on by Fitch. Morningstar slashed its own rating, noting that, while New York Community’s liquidity was looking decent enough, the larger community was still gunshy about anything that might seem like a bank failure already in progress. Such concern might make for a self-fulfilling prophecy, and send depositors and investors alike screaming for the exits.
Screaming for the Entrance Instead
That’s where the counter-intuitive part kicks in. It turns out that the recent hefty share price decline in the wake of the first two cuts has sent share prices down so low that they haven’t been this cheap in years. Decades, actually; reports suggest that, for a while, share prices were down around what they were in 1997. That proved far, far too attractive a proposition to at least not consider taking out a flier on, especially given that New York Community came back noting that it had ample liquidity to handle virtually any problem it encountered. Given that even Morningstar agreed with that proposition, it’s little surprise that some investors smelled a bargain in the making.
What is the Target Price for NYCB Shares?
Turning to Wall Street, analysts have a Hold consensus rating on NYCB stock based on one Buy, 12 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 47.08% loss in its share price over the past year, the average NYCB price target of $6.42 per share implies 31.56% upside potential.
