The shares of PrivateBancorp (NASDAQ: PVTB) wasted no time in finding a fresh annual low this morning after the Chicago-based bank announced plans to slash its dividend by 87%. The quarterly payout will now be one penny per share, down from 7.5 cents per share. On the heels of this report, the stock quickly slipped to $9.65, marking its lowest price since September 2002.
"Given the current economic and regulatory environment, we felt this was a prudent step to take to further enhance our capital position and our liquidity," said President and CEO Larry D. Richman in a statement.
The shares of PVTB have garnered a few price-target cuts today, with Sandler O'Neill cutting its estimate from $11 to $10, and RBC dropping its price target from $16 to $13. The brokerage firms reiterated their respective "sell" and "sector perform" opinions on the equity.
Most analysts are bearishly aligned toward the stock, with Zacks reporting one Buy, six Holds, and three Strong Sells. Short sellers have also ramped up their bets on PVTB's decline, with short interest accounting for a whopping 17.7% of the security's available float. At the shares' average daily trading volume, it would take nine days for all these bearish bets to be repurchased.
This hefty accumulation of shorted shares indicates that PVTB could find some relief from its sell-off, assuming that pessimistic players decide to take profits on their winning positions. However, the bears aren't calling a bottom just yet -- at midday, PVTB was still lingering near an 8.3% loss, just fractionally improved from the multi-year low it tagged earlier in the session.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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