Tuesday, June 20, 2006

Calls of Note Part 5

- SunTrust Robinson Humphrey is defending Commerce Bancorp (NYSE:CBH) noting that as they have mentioned before with CBH, they have expected a bumpy ride for the stock through the end of the current rate hike/flat yield curve cycle, and we have definitely seen it over the past few weeks. The stock is down from nearly $41 on June 1 (the day S&P announced CBH would be added to the S&P 500 index) to a price of $34.52 as of June 19.

Firm viewx current price levels as a fresh opportunity to get into the stock for the following reasons: 1) The stock is currently trading very near eight year Price/Book Value lows; 2) The company continues to grow the balance sheet over 25% per year organically; 3) Outside of an abnormally long period of a flat or inverted yield curve (more than twelve months), investors can reasonably expect the current cycle to be somewhere just after the mid-point of what they believe the duration will be. Reiterates Buy rating and $41 price target.

Notablecalls: Note that FBR is downgrading the shares today. Would not be surprised to see a bounce after the initial sellers are done.

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