On Friday, Keefe, Bruyette & Woods adjusted its price outlook for First Interstate Bancsystems (NASDAQ:FIBK), increasing the price target to $29.00 from the previous $28.00. The firm has decided to maintain a Market Perform rating on the stock.
The revision in the price target comes after a review of First Interstate Bancsystems' financial performance. The firm acknowledged a strong expense management that led to better-than-expected pre-provision net revenue (PPNR). Additionally, credit costs were noted to be lower even though there was a significant $54 million commercial and industrial (C&I) credit that shifted to non-performing loans (NPL).
The analyst from Keefe, Bruyette & Woods provided insight into the decision, citing the first quarter's results as a key factor. "Solid expense print provided the PPNR upside to KBWe, while credit costs were also lower despite a large $54mm C&I credit migrating to NPL," the analyst stated.
Furthermore, the firm has updated its earnings estimates for First Interstate Bancsystems. The 2024 earnings estimate has been increased by 4% in reflection of the first quarter's performance. Looking ahead to 2025, the earnings estimate has been raised by 2%, attributed to anticipated higher net interest income (NII) and lower taxes.
The new price target of $29 represents a modest increase from the previous target but indicates that Keefe, Bruyette & Woods sees potential for First Interstate Bancsystems' stock value to grow. The Market Perform rating suggests that the firm believes the stock will perform in line with the broader market expectations.
InvestingPro Insights
Keefe, Bruyette & Woods' updated price target for First Interstate Bancsystems aligns closely with current analyst targets, which reflect a fair value of $29.00. This is supported by InvestingPro data showing a previous close price of $26.95, suggesting there is room for growth towards the target. The company's commitment to returning value to shareholders is evident through a substantial dividend yield of 6.98% and a history of maintaining dividend payments for 15 consecutive years. This may appeal to income-focused investors, especially in the context of a market cap of $2.86 billion and a price-to-book ratio that suggests the stock may be undervalued at 0.89.
While the company's revenue has seen a decline over the last twelve months, with a drop of 9.86%, First Interstate Bancsystems' operating income margin remains strong at 39.32%. This indicates efficient management of operating expenses relative to revenue, a key point also highlighted by the Keefe, Bruyette & Woods report. However, investors should note that three analysts have revised their earnings downwards for the upcoming period, which could signal caution.
For those interested in a deeper dive into First Interstate Bancsystems' financial health and future prospects, InvestingPro offers additional tips and metrics. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With seven more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's performance and potential.
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