Increased Confidence In M&A Earns Iberiabank Stock An Upgrade

Analysts at Piper Jaffray turned bullish on IBERIABANK Corp (NASDAQ: IBKC), a $4 billion bank with hundreds of offices in 10 states mostly throughout the Southern U.S. The firm's Peyton Green upgraded Iberiabank's stock rating from Neutral to Overweight with a newly established $89 price target.

The analyst's upgrade stems from Iberiabank's $1.03 billion acquisition of Sabadell United, a financial institution with 25 offices mostly in the Miami metropolitan region. Green recently met with Iberiabank's management team who expressed more confidence in the integration and earnings ramp from the acquisition.

"It was clear to us that this view was shared across the integration team — many of whom were uncertain about the melding of the two cultures when the deal was announced," Green added. "Importantly, the similarity of the two cultures gives us more optimism that revenue growth could accelerate at [Sabadell United] relative to historical levels."

Moving forward, the regional bank should have no problem in meeting its cost savings goal of $21 million, or 27 percent of Sabadell United's overhead in the fourth quarter in 2018, the analyst added. The objectives also seem reasonable when considering Iberiabank's decision to close five locations, which have overlapping markets under the combined entity.

Finally, the merger provides for an ideal opportunity in cross selling as Sabadell has expertise in wealth management, CRE lending, and banking law firms. These new areas can now be offered across Iberiabank's already existing footprint.

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