Community West Bancshares upgraded to Buy at Janney after Central Valley deal

Janney Montgomery Scott upgraded Community West Bancshares (CWBC) to Buy from Neutral with a $15 fair value estimate. The firm expects that Community West’s merger with Central Valley Community (CVCY) will close on schedule in Q2 of 2024 and that Community West’s stock should trade in-line with Central Valley’s stock, noting that its revised fair value estimate is equivalent to about 75% of its fair value estimate on Central Valley’s stock of $20.00. Given the deal terms call for Community West shareholders to receive 0.79x Central Valley shares for each Community West share and that the exchange ratio is fixed, the firm anticipates changes in the share price of the one could be correlated to the other and notes that Central Valley shares are up more than 14% since the deal was announced.