The analysts at FBR Capital Markets have upgraded Flagstar Bancorp to "outperform" from "market perform," even though the company's first quarter loss was worse than they had predicted.
Even with the loss, FBR believes that Flagstar "is a step closer to profitability this quarter." At the same time, the analysts changed their full year prediction to a $0.09 per share loss from a $0.02 per share profit. Their 2012 profit prediction was cut to $0.05 per share from $0.11 per share.
FBR said Flagstar's "management is taking the right steps to overcome its credit problems and generate earnings."
Nonperforming assets is a worry spot for FBR as Flagstar had a near 10% increase. But the analysts feel management is aggressively working to rid the company of NPAs, as shown by the recent $407 million sale of bad assets.
Another positive, said FBR, is Flagstar's shift to a commercial banking business model from a mortgage banking one. The analysts feel it is taking constructive steps toward completing the shift and if it is successful, the change could support further earnings growth.
