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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: john722 who wrote (30969)	8/1/2000 9:35:15 AM
From: marquis103	Respond to of 57584

SVRN. From Briefing.Com. Russ Trader's Edge: Sovereign Bancorp (SVRN) 01-Aug-00 00:03 ET [BRIEFING.COM - Robert Walberg] In a Brief entitled "Say No to Big Mo," Briefing.com noted that the Regional Banking sector was poised to benefit from sector rotation. A number of you emailed us asking for some stocks in the group that we thought offered good prospects for intermediate- to long-term capital appreciation. Sovereign (SVRN 7 1/32) is one such example and here's a few reasons why: Trading Points Let's start with the obvious - this stock is cheap. And we're not just talking about the fact that SVRN trades for under $10 per share or that it is 44% off its 52-wk high... No what we're talking about here is relative valuations... SVRN trades at 6x estimated FY00 earnings of $1.16 and 5x projected FY01 earnings of $1.35, with a long-term growth rate 12.3%... Stock also trades at roughly 6.4x cash flow and 0.9x book... By all measures SVRN trades at a deep discount to the market and to its industry - despite the fact that its projected long-term growth rate of 12.3% is above both the industry and market rates. So why the big discount... An earnings slowdown and integration issues... Briefing.com not dismissing either of these concerns, but at current prices we maintain that the downside risk is minimal... Meanwhile, recent developments suggest company back on right track as Q2 earnings exceeded consensus estimates by nearly 12%; company posted an annualized growth rate in core deposits of 11%; the core bank margin rose by 0.23%; and on July 21 SVRN completed the integration of the FleetBoston branches and business lines for Sovereign Bank New England... Sovereign Bank New England, a division of Sovereign Bancorp, will be the third largest bank in the region with 281 community banking offices and approximately 550 ATMs throughout New England. Like other regional banking companies, Briefing.com expects SVRN to benefit from end of tightening cycle... Last week's GDP concerns aside, Briefing.com holding to view that Fed will remain on sidelines in August... End of last tightening cycle marked beginning of 2-3 year rally in the sector. Technically, stock starting to emerge from long-term basing formation... 50-day moving average has climbed back up to 200-day moving average... Crossover would be bullish long-term signal. With most of the negatives already factored in, the Fed adopting a more favorable tone on rates and technicals showing signs of improvement, Briefing.com contends that risk/reward ratio definitely favors the bulls... Our 6-mo to 12-mo target is 10, with an 18- to 24-mo target of 15-20... Key support is at 6 1/4. Robert Walberg