|Written by GSCR Staff|
|Friday, 04 January 2013 06:48|
By virtually all accounts, the Street consensus is that bank M&A activity could be extremely robust this year. So, why not highlight one of them, right? And what better stock to highlight that one that just happened to reach a 52-week high yesterday and is a real M&A candidate.
With a market cap approaching $2 billion, Synovus Financial Corporation (NYSE – SNV - $2.57) is no small company. That is a big advantage as its size, standing, approach and business model make it a real target for mid-large size banks. Fortunately for us, it is also a small cap stock.
Synovus is a well-regarded southeast regional financial services company with $26 billion in assets based in Columbus, Georgia. Synovus’ divisions provide commercial and retail banking, investment, and mortgage services to customers through 30 locally branded divisions, 293 offices, and more than 300 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee.
Synovus is one of the most widely followed and heavily traded stocks in its peer group. Synovus has nearly 20 analysts following it and the stock trades over 2 million shares daily. Moreover, the Company enjoys major institutional ownership to the tune of 70% of the outstanding shares.
The Company is expected to release its 4Q12 results on January 22nd, and while revenue is expected to decline by 10% with limited profitability, the Street is estimating that EPS will jump to $0.14 in 2013. The 52-week high for the stock is $2.64 and we believe that as M&A activity in the space occur, SNV will be a part of the discussion and ride the wave. On a fundamental business basis, one could argue that the Company has underperformed a bit. Yet, given its size, model and attractive regional market, we could see a buyout of this bank well north of the $3.00 mark.
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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