Why Westfield Financial, Inc. have been downgraded?

Westfield Financial, Inc. (NASDAQ:WFD) received a stock rating downgrade from Compass Point on Apr-05-16. In a note to investors, the firm issued a Neutral rating and lowered the target price on the stock from $9.50 to $8.50. The analysts previously had a Buy rating on the stock.

Analysts have a consensus target price of $8.50 in the 12-month period. The price objective is 11.84% higher than the recent closing price of $7.60. The 52-week price range is $6.98-$8.85 and the company has a market capitalization of $138.32 billion. Analysts covering the shares maintain a consensus Hold rating, according to Zacks Investment Research. Zero analyst has rated the stock with a sell rating, 2 has assigned a hold rating, 0 says it’s a buy, and 0 have assigned a strong buy rating to the company.

On April 4, 2016 Westfield Financial, Inc. (WFD), the holding company for Westfield Bank (collectively “Westfield”), and Chicopee Bancorp, Inc. (CBNK), the holding company for Chicopee Savings Bank (collectively “Chicopee”),  jointly announced the signing of a definitive merger agreement whereby Chicopee will merge with and into Westfield.  The merger will create the largest locally managed bank in Hampden County, Massachusetts and the second largest bank in terms of deposit market share in the county.  The combined company will have total assets of $2.1 billion, tangible equity of over $215 million and 21 branch locations serving customers throughout western Massachusetts and northern Connecticut.

Under the terms of the agreement, Chicopee shareholders will be entitled to receive 2.425 shares of Westfield common stock for each share of Chicopee common stock, equal to $20.42 per share, based on the closing price for Westfield common stock on April 4, 2016.  The common stock options of Chicopee will be converted into Westfield options with the same relative economic value and expiration date.  Upon closing, Westfield shareholders will own approximately 59% of stock in the combined company, and Chicopee shareholders will own approximately 41%. The transaction is valued at approximately $110 million in the aggregate, based on the closing price for Westfield common stock on April 4, 2016.

“We are excited to combine with such a strong partner as Chicopee,” stated James C. Hagan, President and Chief Executive Officer of Westfield.  “As we have gotten to know Bill Wagner and his team over time, we have been pleased at the commonality of our cultures, operating models and the customer service focus of our two institutions.  Although headquartered in the same county, we currently serve two distinct customer bases, which, when combined, will complement each other tremendously.  A merger of our two banks will be extremely favorable for the shareholders, customers, employees and communities of both institutions.”

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