Thursday, DA Davidson adjusted its price target on shares of United Community Banks (NASDAQ: NASDAQ:UCBI), decreasing it to $32 from the previous $33, while continuing to endorse the stock with a Buy rating. The adjustment follows a minor revision of earnings estimates for the upcoming years.
The firm revised its earnings forecast for United Community Banks, reducing the 2024 estimate by $0.03 to $2.17 and the 2025 projection from $2.44 to $2.41. This update reflects an anticipated increase in operating revenue and a reduction in the provision for credit losses, which are somewhat counterbalanced by an expected rise in operating expenses.
The new price target is based on a 1.5 times multiple of the estimated tangible book value (TBV) for 2025, which is projected to be $21.52. DA Davidson's analysis suggests that United Community Banks may experience growth beyond their estimates due to the potential for accelerated expansion in the bank's Southeast markets and possible net interest margin (NIM) or net interest income (NII) improvements if the yield curve normalizes.
In the statement provided, the firm expressed confidence in the bank's future performance, citing the Southeast markets' attractiveness and the potential financial benefits from a normalized yield curve as reasons for maintaining the Buy rating despite the slight decrease in the price target.
InvestingPro Insights
In light of DA Davidson's revised earnings forecast and price target for United Community Banks, it's important to consider additional financial metrics and insights that can provide investors with a broader perspective. According to the latest data from InvestingPro, United Community Banks has a market capitalization of $3.14 billion and a price-to-earnings (P/E) ratio of 17.23, which adjusts to 15.93 when looking at the last twelve months as of Q1 2024. The company's revenue for the same period stands at approximately $809.76 million, although it has experienced a revenue decline of 6.53%.
InvestingPro Tips highlight that United Community Banks has a strong history of rewarding shareholders, having raised its dividend for 10 consecutive years and maintained dividend payments for 11 consecutive years. Moreover, analysts predict the company will be profitable this year, which aligns with the fact that it has been profitable over the last twelve months. However, the bank does suffer from weak gross profit margins, which could be a point of concern for potential investors.
For investors seeking more in-depth analysis and additional InvestingPro Tips, they can explore further insights on the company's financial health and future prospects. There are currently 5 additional tips available on InvestingPro, which can be accessed for United Community Banks at: https://www.investing.com/pro/UCBI. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing your investment research with valuable data and expert insights.
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