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FVCBankcorp (FVCB) Surges 15.2%: Is This an Indication of Further Gains?

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FVCBankcorp (FVCB - Free Report) shares rallied 15.2% in the last trading session to close at $20.05. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 2% loss over the past four weeks.

FVCBankcorp extended its rally for the third consequent day and touched a new 52-week high of $20.95 within the first hour of trading yesterday. The rally was driven by announcement of an “all-stock merger of equals” deal between Blue Ridge Bankshares, Inc. and FVCBankcorp. This will lead to formation of the 4th largest Virginia-based community bank (in terms of assets).

Under the terms of the transaction, FVCBankcorp shareholders will receive 1.1492 shares of Charlottesville, VA-based Blue Ridge Bankshares common stock for each share of FVCBankcorp. So, FVCBankcorp shareholders will own 47.5% and Blue Ridge shareholders will own 52.5% of the combined company, following the closure.

The deal, likely to close in the fourth quarter of 2021 or early first quarter of 2022, is projected to be 16% accretive to Blue Ridge Bankshares’ earnings in both 2022 and 2023. The company expects to achieve 100% cost savings over time. The combined bank will be based out of Fairfax, Virginia and will keep operation centers in other markets across Virginia, Maryland and North Carolina.

This company is expected to post quarterly earnings of $0.35 per share in its upcoming report, which represents a year-over-year change of +40%. Revenues are expected to be $14.72 million, up 10% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For FVCBankcorp, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FVCB going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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