Raymond James Downgrades OceanFirst Financial (OCFC) to Market Perform

Raymond James analyst Daniel Tamayo downgraded OceanFirst Financial (NASDAQ: OCFC) from Outperform to Market Perform.

The analyst comments "We are downgrading OCFC shares to Market Perform from Strong Buy while updating our model following the announcement to acquire Flushing Financial (FFIC/$15.38). Though the deal increases OceanFirst’s presence in Long Island and Manhattan, boosts EPS forecasts, and was announced at a fair market price (0.8x P/TBV), the significant acquisition dilutes and slows the benefit of its shift to a stronger core deposit franchise and C&I lender (the primary catalyst for our prior rating), carries risk in maintaining bankers and the ability to lower funding costs in competitive markets, and lessens the likelihood of the bank being a seller in the intermediateterm, while stock warrants issued in conjunction with the capital raise will be an incremental headwind to share appreciation. With several quarters necessary to prove out the merits of the deal along with potential NIM headwinds from lower rates (albeit modest) despite forecasts for profitability to improve and for solid organic growth and credit metrics to continue, we see fewer near-term catalysts for shares to outperform in the near-term."

For an analyst ratings summary and ratings history on OceanFirst Financial click here. For more ratings news on OceanFirst Financial click here.

Shares of OceanFirst Financial closed at $18.29 yesterday.

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