Ferris Baker Watts Ups Cardinal Financial to Buy

Analyst Matthew Schultheis notes a decrease in the company's share price

From Standard & Poor's Equity Research

Ferris Baker Watts upgraded Cardinal Financial (CFNL) to buy from neutral, noting a recent decrease in the price of the company's shares.

Analyst Matthew Schultheis believes this opportunity is for investors to acquire positions in the fast-growing company in markets with positive demographic trends at reasonable valuation. He leaves 2006 and 2007 earnings per share (EPS) estimates at 50 cents and 60 cents, respectively. He says his $13 target price is based on his acquisition free cash flow to equity model, which values the company from the viewpoint of an acquirer. He assumes the company would be willing to sell after 2006, as its prior investments in growth initiatives begin to show improved profitability.