It’s an explosive day for New York Community Bancorp (NYSE:NYCB), as the embattled bank stock faces an increasingly distressing environment. It would have been easy to think that the recent federal seizure of Republic First might have made some remember the catastrophe pile that was New York Community, but shares shot up nearly 28% in Wednesday afternoon’s trading as the CEO presented a plan that investors landed on in droves.
The plan, presented by CEO Joseph Otting, was welcome, though oddly noncommittal. The plan called for a “clear path to profitability” that would take two years to execute. The combination of hefty first-quarter losses and a long-term path to recovery was apparently the secret sauce needed to fire up investor interest as shares surged accordingly.
NYCB’s losses were distressing; it posted a loss of $0.45 per share, which is down a long, long way from the net income of $2.87 per share in the first quarter of 2023. While adjusted losses—which included items related to a recent merger—softened the blow to just $0.25 per share lost, that still blew away even analyst pessimism, which looked for a loss of just $0.15 per share.
Short Sellers Hit Harder
Those hardest hit by these latest developments, meanwhile, were short sellers. Short sellers, reports note, lost a combined total of $42 million at one point following the massive rally. And with New York planning an asset sale within the next two to three months that could bring in $5 billion in extra liquidity, that’s indeed a reasonably good path to profitability, especially if it can properly redeploy that cash into investments with decent returns. Given the state of the market right now, though, returns may be tough to come by, especially over the next two years.
Is New York Community Bancorp a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on NYCB stock based on 13 Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 64.17% loss in its share price over the past year, the average NYCB price target of $4.13 per share implies 22.4% upside potential.
