First Hawaiian Gets Bullish Commentary From Credit Suisse

Credit Suisse has started coverage of First Hawaiian Inc (NASDAQ: FHB) with an Outperform rating and a $29 target price, citing continued strong execution and steady growth in loans driven by a healthy economic backdrop in Hawaii.

The brokerage is bullish on the company, as its model is able to perform in both upside and downside scenarios, while efficient cost structure and low-cost deposit base also aids above-average profitability.

"This story is the best of both worlds, with earnings upside given an improved economic outlook and Fed rate hikes (asset sensitive), yet it is also poised to outperform peers in a slower growth scenario given its efficiency, strong capital levels, above-average dividend yield, and more stable through-the-cycle credit quality versus peers," analyst Jill Shea wrote in a note.

Related Link: First Hawaiian "A Safe Haven," According To KBW

Apart from strong balance sheet, FHB's earnings is set to benefit from Fed rate hikes as "every 50bps is about 5 percent upside to EPS and additive to ROTCE by 0.65 percent."

Shea expects First Hawaiian will have greater flexibility to optimize capital, with increased autonomy once it exits CCAR.

The analyst projects EPS of $1.51 for each of 2016 and 2017 on revenue of $676.6 million and $704.7 million, respectively.

"We believe the earnings profile and stability would allow FHB to target capital return closer to 100 percent of earnings," Shea added.

Shares of First Hawaiian closed Friday's regular trading session at $26.57. The target price of $29 represents a potential upside of 9 percent.

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