Houston-based Cadence Bancorporation (CADE) hasn't had the easiest time over the last few years, as the bank has been struggling with higher credit losses and dents to its reputation as a quality growth name. While credit has started to stabilize, overall metrics still aren't great relative to peers and management has acknowledged that the days of double-digit loan growth are probably over.
Cadence isn't the first bank to see once-bold growth plans interrupted by the realities of underwriting issues, and I don't believe Cadence is a "broken" bank, particularly given still-strong credit and the capability of absorbing meaningful losses. That said, if a recent Bloomberg report is true and Cadence has chosen to explore a sale of the business, I don't think the company will struggle to find takers.
I do see the stock as close to fair value today, with a high single-digit total annualized long-term return potential, but I also do see a buyout price likely starting at around $25. I would never suggest that a reader buy a stock purely as a takeout play, but there is still some upside here.
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With The Business Stabilizing, Cadence Bancorporation May Be Looking For An Exit
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