J.P Morgan Downgrades People's United Financial To Neutral

Last night after the close, People's United Financial PBCT announced in conjunction with 4Q results that it had reached an agreement to acquire Danvers Bancorp DNBK in a cash and stock deal valued at nearly $500 million. Although a relatively new CEO at PBCT, Jack Barnes, has done a good job at stepping up capital deployment efforts, including recently closing SMTB and LSBX acquisitions, stock buybacks, and investing excess capital into securities, with demand exceeding supply in the M&A arena, rising prices for M&A deals implies to J.P Morgan that the outsized returns it had previously expected on PBCT's excess capital appears to be in the history books. J.P Morgan believes the bottom line is that with big premiums again being paid for traditional M&A deals, the play is to own the sellers rather than the buyers. Therefore, J.P Morgan is downgrading shares of PBCT to Neutral. J.P Morgan has a $14 PT on PBCT PBCT closed Thursday at $13.69