Morgan Stanley downgrades Flagstar Bank on turnaround delay
FLG•Morgan Stanley downgraded Flagstar Bank to underweight from overweight and cut its price target to $12 from $15. The bank previously pushed its 2027 financial goals to 2028, citing higher rates and their impact on credit costs.
1. Rating and target cut
Morgan Stanley Research downgraded Flagstar Bank to underweight from overweight, saying higher rates are delaying its turnaround more than the brokerage initially expected. It cut its price target to $12 from $15, which the article said implied 13.9% upside to the stock’s last close.
2. Goals pushed back
Flagstar last month moved its 2027 financial goals to 2028, citing the higher interest-rate environment and its impact on credit costs. Morgan Stanley analysts also cited peer commentary highlighting growing deposit competition and the importance of operating accounts as rates rise and loan demand remains strong.
3. Analyst ratings
LSEG data showed 11 of 18 brokerages rated the stock buy or higher, six rated it hold and one rated it sell; the median price target was $13. Flagstar shares were down 16.3% year to date as of the last close.
