By D.A. Davidson has upgraded PacWest Bancorp (PACW) to a buy rating from neutral, aligning it with Banc of California (BANC), the upcoming acquirer. This move comes in the aftermath of the March bank liquidity crisis, and D.A. Davidson analyst Gary Tenner believes the transaction will be beneficial for both companies’ shareholders. Tenner has also raised PacWest’s price target to $14 per share, up from $8 per share.
Minimal Risk of Transaction Not Closing
Tenner emphasizes that the transaction is highly likely to close, as regulators will welcome the capital injection and stability it brings. This will help accelerate the recovery of value for PACW shareholders.
Fitch Upgrades Ratings Watch on PacWest
Fitch Ratings has upgraded its ratings watch on PacWest to “evolving” from “negative” following the merger announcement with Banc of California. Fitch has maintained its BB+ debt rating for PacWest, the highest speculative grade, or “junk” rating. Fitch expects to resolve the rating watch upon the completion of the pending merger, which is anticipated to occur in either the fourth quarter of 2023 or the first quarter of 2024.
Easing Uncertainty and Boosting Execution
According to Fitch, the proposed merger with BANC is expected to alleviate uncertainty and headline risk surrounding PACW’s liquidity and earnings profiles. Furthermore, it will accelerate the execution of PacWest’s balance sheet restructuring plan.
Stock Performance
On Monday, PacWest stock experienced a 1.4% decrease.
Comments