A troubled company in turnaround, New York Community Bancorp(NYSE: NYCB) has been one of the least popular banking stocks on the market in recent times. However, one analyst believes the shares are now priced fairly, as he recently upgraded his recommendation on the stock to the equivalent of a hold. This helped the company's stock book a nearly 9% gain in price across this week, according to data compiled by S&P Global Market Intelligence.
Rate cut supports struggling lender
That upgrade occurred in the wee hours of Tuesday morning, and came from Raymond James Financial's Steve Moss. Although Moss shifted his recommendation on New York Community Bancorp from the previous underweight (sell, in other words), he did not place a price target on the shares.
Tuesday was the day before the Federal Reserve (Fed) pulled the lever on its 50-basis-point interest rate cut; the analyst's move was made in anticipation of the regulator's reduction. Although economists and other pundits varied in their estimates for how deep the cut would go, the vast majority expected some degree of chop.
New York Community Bancorp isn't realistically poised for sudden and dramatic improvement. The bank expanded too quickly in the wrong direction, especially with its acquisition of struggling lender Signature Bank in 2023. Not long after that, it admitted that a clutch of large loans in its portfolio were at risk.
Investors vigorously sold out of the stock, and management cut the dividend to nearly nothing. The company was in lousy-enough shape to warrant an investor bailout, to the tune of over $1 billion.
Still not a buy, though
With the Fed's rate cut, Moss feels there is "increased merit to owning liability-sensitive" banks in an environment of lower rates. That doesn't make him a New York Community Bank bull, however, as he cautioned that the company's recovery should last for an "extended" period of time.
Should you invest $1,000 in New York Community Bancorp right now?
Before you buy stock in New York Community Bancorp, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and New York Community Bancorp wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $722,320!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 16, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
