Davidson upgrades First Foundation after ‘clearing event’ capital raise

DA Davidson analyst Gary Tenner upgraded First Foundation to Buy from Neutral with a price target of $9, up from $8, following the company’s announced capital raise. While the bank’s near term profitability remains under pressure, the capital raise is a “clearing event,” allowing the company the capacity to sell loans, reducing concentration levels and earnings pressure, and build its allowance for credit losses, while maintaining solid capital levels, the analyst tells investors in a research note. The firm reduced estimates to reflect the dilutive impact of the capital raise, but sees a potential lift to numbers as First Foundation executes on loan sales.