On Tuesday, Hope Bancorp Inc. (NASDAQ:HOPE) received an upgrade in its stock rating from DA Davidson, moving from Neutral to Buy. The financial institution's share price target remains steady at $12.50. This upgrade follows the announcement of Hope Bancorp's merger with Territorial Bancorp Inc. (NASDAQ:TBNK), a deal that is anticipated to significantly enhance earnings per share (EPS) in 2025.
The DA Davidson analyst noted the merger is expected to bring a double-digit EPS accretion in 2025, with minimal credit risk involved. Additionally, the transaction is seen to offer a prolonged period of discount accretion benefits. Despite the potential challenges of entering a market that has historically been difficult for mainland banks and acquiring a bank that has not shown significant growth recently, the analyst believes these risks are already reflected in the current stock price.
The assessment by DA Davidson comes after Hope Bancorp experienced a notable decline in its stock value. On Monday, the shares saw a sell-off, dropping by 9.4%. The analyst's perspective suggests that the current market valuation accounts for the potential challenges and headwinds to core earnings that may arise from the merger.
The merger between Hope Bancorp and Territorial Bancorp represents a strategic expansion for the former, potentially bringing long-term financial benefits despite the short-term risks associated with the deal. The maintained price target of $12.50 by DA Davidson indicates a steady outlook for Hope Bancorp's stock value in light of the recent developments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.