On Friday, Keefe, Bruyette & Woods adjusted its price target for Flushing Financial Corp (NASDAQ:FFIC), a banking institution, reducing it to $13.00 from the previous $14.00. The firm has kept its Market Perform rating on the stock unchanged.
The adjustment follows Flushing Financial's recent quarterly report, which revealed a core net interest margin (NIM) miss of 11 basis points. This miss has led to a revised NIM trajectory and a delay in the expected timeline for profitability improvements.
Despite a slight increase in pre-provision net revenue (PPNR) and consistently strong credit quality, particularly in the multifamily sector, the company's near-term financial outlook appears less robust than previously anticipated.
In light of these developments, the firm has revised its earnings estimates for Flushing Financial downward, from $0.77 to $0.74 for 2024 and from $1.21 to $1.11 for 2025. The stock has underperformed the KRX by 600 basis points since the earnings report was released. This underperformance reflects investor concerns that the weaker earnings outlook overshadows the solid credit results.
The stock's current trading value is at 51% of tangible book value (TBV), which, despite being a discount, has not prompted the firm to alter its Market Perform rating. The firm cites limited near-term upside potential due to low profitability projections, with a return on tangible common equity (ROTCE) of 5.5% expected for 2025. According to the firm, substantial NIM expansion would be required for Flushing Financial to align with its peers' performance levels.
The new price target of $13.00 is based on a forward-TBV multiple of 0.6x and a 12x multiple of the estimated 2025 earnings.
InvestingPro Insights
As investors consider Keefe, Bruyette & Woods' revised price target for Flushing Financial Corp (NASDAQ:FFIC), it is essential to weigh recent performance metrics and analyst insights. According to InvestingPro data, Flushing Financial Corp currently has a market capitalization of $328.18 million and a trailing P/E ratio of 11.82, suggesting a valuation that might appeal to value-oriented investors. The dividend yield stands at an attractive 7.73%, which is significant for income-focused portfolios, especially when noting the company's history of maintaining dividend payments for 29 consecutive years.
However, the company has also experienced a revenue decline of 16.66% over the last twelve months as of Q1 2024, which aligns with concerns about its near-term financial outlook. Despite this, analysts predict profitability for the year, and the company has remained profitable over the last twelve months. Two InvestingPro Tips to consider are that analysts have recently revised their earnings downwards for the upcoming period, and the stock price has fallen significantly over the last three months, by 32.73%. These factors may influence investor sentiment and decision-making.
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