Investors have returned to bank stocks in a significant way, and riskier names (or at least those perceived as riskier) have done pretty well over the past few months. Included in that list is BankUnited (BKU), which has now reported three straight quarters of better-than-expected provisioning results. At the same time, BankUnited has been making what looks like prudent decisions with respect to its loan activity, and the influx of low-cost deposits since the start of the pandemic raises the prospect of a much-improved funding situation into the recovery.
The "but" is that a lot of the positives seem to be in the share price. I do expect above-average long-term growth from BankUnited, and the shares aren't overvalued, but near-term upside to around $40 and a long-term high single-digit expected annual total rate of return seems a little less exciting to me than other banks that still appear to offer the possibility of double-digit returns.
Read more here:
Credit Risk Fading For BankUnited, But The Valuation Already Assumes Above-Average Growth
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