On Wednesday, DA Davidson adjusted its outlook on First Citizens BancShares shares (NASDAQ:FCNCA), increasing the price target to $1,850 from the previous $1,650 while maintaining a Neutral rating on the stock.
The adjustment comes following the company's reported earnings, which included a solid core pre-provision net revenue (PPNR) beat. The earnings per share (EPS) also exceeded expectations, benefiting from much lower credit costs than anticipated.
The bank's non-performing loans (NCOs) were reported at 31 basis points (bp), which was below the projected range of 50-60 bp. The financial results highlighted a net interest margin (NIM) contraction due to purchase accounting accretion declines, which was recorded at 19 bp.
Still, this was coupled with robust growth in loans and deposits, which saw increases of 6% and 10% respectively. This growth was attributed to the strength in the General and Commercial Bank and stabilizing trends at Silicon Valley Bank (SVB).
First Citizens BancShares' stock performance has been notable, with a 4% increase compared to the KBW Regional Banking Index (KRX) since the earnings announcement and a 29% rise year-to-date (YTD).
DA Davidson's revised earnings per share (EPS) forecast reflects the better-than-expected credit costs. The analyst also acknowledged improved first-quarter fees and balance sheet growth, which have not yet altered the overall outlook but could provide upside potential for the fiscal year 2024.
Despite the positive aspects of First Citizens BancShares' recent performance and the raised price target, DA Davidson's reiteration of a Neutral rating indicates that the current stock price may already reflect much of the potential upside, based on the firm's analysis.
InvestingPro Insights
DA Davidson's new price target for First Citizens BancShares (NASDAQ:FCNCA) reflects optimism about the bank's recent performance, and the InvestingPro platform offers additional context to this analysis.
First Citizens BancShares has shown commendable financial discipline, as evidenced by the fact that it has raised its dividend for 7 consecutive years and maintained dividend payments for an impressive 39 years. This consistency is a positive indicator for investors looking for stable dividend income.
The company also boasts a high return over the last year, with a 57.59% price total return, outperforming many of its peers. With a P/E Ratio (Adjusted) for the last twelve months as of Q4 2023 at just 6.52, the stock is trading at a low earnings multiple, which suggests it may be undervalued relative to its earnings potential. Furthermore, the company's strong return over the last three months, at 15.96%, aligns with DA Davidson's observation of the stock's recent outperformance.
Investors interested in further insights can find additional InvestingPro Tips on First Citizens BancShares, which provide a deeper dive into the company's financial health and future prospects. For those looking to make the most of their investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 10 more tips available on InvestingPro, subscribers can gain a comprehensive understanding of the company's trajectory.
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