KRE - BankUnited upgraded to Neutral at J.P. Morgan as bear thesis mostly played out

2023-04-26 11:42:21 ET

BankUnited ( NYSE: BKU ) stock climbed 2.7% in Wednesday late morning trading after J.P. Morgan analyst Steven Alexopoulos upgraded the regional bank to Neutral from Underweight, as his bear thesis has largely played out.

"While there is likely still a quarter (or two) of fairly sharp NIM pressure ahead, with BKU now one of the highest deposit payers among our coverage universe our prior negative view is now in the 7th or 8th inning," Alexopoulos wrote in a note to clients.

And while BankUnited's ( BKU ) decline in deposits at the end of Q1 was larger than expected, "the outflows in the week after the collapse of SVB and SBNY proved to be temporary and have since stabilized," he said.

In addition, the company has done a good job of lower expectations during its Q1 earnings call, Alexopoulos said. Specifically, management reduce its 2023 loan growth outlook to flat Y/Y and net interest margin outlook to 2.50%s.

Besides playing defense, BankUnited ( BKU ) is also going on the offnse by hiring teams in new markets and adding to teams in existing ones.

BankUnited's ( BKU ) advance comes during a bullish session for regional banks. The SPDR S&P Regional Banking ETF (KRE ) rose 1.7% .

Alexopoulos's Neutral rating on BKU contrasts with the Quant rating of Sell and aligns with the average Wall Street rating of Hold.

More on BankUnited:

BankUnited GAAP EPS of $0.70 missed by $0.19, revenue of $244.1M misses by $15.97M

A Solid Bank, Undervalued Dividend Stock

From January, BankUnited Posting Good Loan Growth, But Margin Pressures Loom

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