Raymond James has downgraded StellarOne (NYSE:STEL) from Outperform to Market Perform in response to the recently announced acquisition of the bank. The change brings the broker's rating on StellarOne into line with its existing Market Perform view on the acquiring company.
StellarOne shares were trading at $36.42 at the time the note was issued, roughly 1% below the 52-week peak of $36.78. InvestingPro data cited in the research note shows the stock has returned 29.75% over the past year, reflecting market optimism about the transaction.
In its commentary, Raymond James reiterated factors that had previously made StellarOne an attractive takeover candidate - a solid core deposit franchise, growth potential in key markets, notably its Houston footprint, and a scarcity premium for banks of its scale in Texas. Those attributes, the firm had said earlier, underpinned the company’s appeal to potential acquirers.
The purchase price in the deal was characterized by Raymond James as "full but fair." The firm observed that it would likely have taken StellarOne multiple years to reach the deal price on a stand-alone basis, and concluded the consideration appropriately compensates shareholders for the bank's ongoing fundamental improvements.
From a valuation standpoint, Raymond James noted StellarOne’s market capitalization of $1.85 billion and a price-to-earnings ratio of 16.4, figures the firm views as consistent with its assessment of the transaction. InvestingPro analysis cited in the research also indicates the company has been profitable over the last twelve months, posting a return on equity of 6%.
The downgrade comes even as StellarOne’s most recent quarterly results showed signs of improving financial and operating performance. Raymond James suggested management may have had reservations about selling the bank given these improvements, but called the bid "too good to refuse" on the basis of the accelerated returns delivered to shareholders through the transaction. The firm concluded shareholders "should be pleased with the deal" while noting the acquisition announcement itself was not unexpected given StellarOne’s standing as an attractive takeover target.
InvestingPro data referenced in the note highlights additional shareholder-return metrics. StellarOne has maintained dividend payments for 9 consecutive years, with dividend growth of 15.38% and a current yield of 1.65%. The company also registers a GOOD overall financial health score in InvestingPro’s framework, further underlining its appeal for potential acquirers.
For investors seeking deeper, model-driven analysis, InvestingPro’s Pro Research Reports are noted as a source of extended coverage on StellarOne and a broad set of other names.
Recent operational details cited alongside the deal illustrate the bank’s latest performance metrics. In the third quarter of 2025, Stellar Bancorp reported earnings per share of $0.50, modestly above the consensus of $0.49. Revenue for the quarter totaled $105.63 million, narrowly missing expectations of $105.92 million. The company also increased its quarterly dividend by $0.01, to $0.15 per share, with the dividend slated for distribution on December 31, 2025.
Taken together, the research note and the company’s operating update paint a picture of a regional bank that has demonstrated measurable improvement in key metrics, but whose immediate shareholder returns will now be driven by an acquisition that Raymond James deems appropriately priced. The broker’s shift to Market Perform reflects a calibration of expectations now that a transaction has crystallized the near-term value for holders.