On Thursday, Raymond (NS:RYMD) James made a significant change to United Community Banks ' (NYSE:NYSE:UCB) stock rating, upgrading it from Market Perform to Outperform and setting a new price target of $35.00.
"We are upgrading UCB shares from Market Perform to Outperform to reflect our view that the company will reap the benefits of the coming de-regulatory environment via a series of M&A transactions in coming years," the firm said.
The analyst at Raymond James highlighted that United Community Banks recently initiated a series of M&A transactions with the acquisition of ANB Holdings. This move is seen as the beginning of a trend that could see banks, especially those outside the Global Systemically Important Banks (G-SIBs) category, engaging in multiple deals annually. The analyst predicts a more bank M&A-friendly environment in 2025, with banks of all asset sizes being permitted to announce several deals per year.
United Community Banks' strategy of targeting smaller banks, typically in the $1-3 billion range, is expected to align well with the forthcoming opportunities. The firm's fundamental narrative is viewed in a positive light, with projections of accelerating loan growth, benign credit trends, and improved profitability in the coming year.
The analyst also mentioned United Community Banks' potential as an attractive acquisition target due to its size, approximately $27.4 billion, and solid market share in several high-growth markets. In particular, the bank holds significant positions in Georgia, North Carolina, and South Carolina, ranking 7th, 15th, and 8th in deposit market share, respectively.
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