Last Call: East West Bancorp shares rise

Shares of East West Bancorp rose Monday, along with most financial stocks, as the government moved to rescue mortgage giants Fannie Mae and Freddie Mac.

An analyst's upgrade of the stock also helped boost East West shares.

The stock climbed 76 cents, or 5.5 percent, to $14.62 in afternoon trading. Shares have traded between $6.77 and $38.42 in the past 12 months.

The announcement late Sunday that the Treasury Department was taking control of Fannie and Freddie, which own or guarantee nearly half of all the country's mortgages, sent financial stocks higher Monday.

The plan to inject up to $200 billion in the companies could help banks feel more open to write new mortgages and to refinance existing mortgages at lower rates.

In a note to clients, Friedman Billings Ramsey analyst James Abbott raised his rating on East West to "Outperform" from "Market Perform" and increased his target price by $6 to $18.

"We believe that yesterday's decision to place the government-sponsored enterprises into a conservatorship has positive implications for bank stocks in general, specifically those with depressed valuations driven by uncertainty surrounding capital levels relative to exposure to housing-related losses," Abbott wrote.

"We believe East West Bancorp has been one of the most proactive banks in addressing existing and potential problem loans in its portfolio and, with its $200 million capital raise during the second quarter of 2008, it could emerge from this cycle well positioned to take better advantage of growth opportunities than its peers," he added.