On Thursday, Keefe, Bruyette & Woods adjusted its price target for Simmons First National Corporation (NASDAQ:SFNC), reducing it to $20.00 from the previous $21.00. The firm maintained its Market Perform rating on the bank's stock. The adjustment followed the company's first-quarter earnings report for 2024, which fell short of both Keefe, Bruyette & Woods and consensus estimates, primarily due to a lower-than-expected net interest income (NII).
The bank's net interest margin (NIM) declined slightly by 2 basis points to 2.66%, missing the firm's estimate of 2.75%. Analysts at Keefe, Bruyette & Woods anticipate that the NIM may experience some modest compression in the second quarter of 2024 but expect it to expand in the second half of the year. Despite the earnings miss, Simmons First National largely reaffirmed its forward guidance.
Non-performing assets (NPAs) saw an increase to 0.66% of loans and other real estate owned (OREO) from 0.54% in the fourth quarter of 2023. Classified assets remained roughly unchanged from the previous quarter. In light of these factors, Keefe, Bruyette & Woods has revised its earnings estimates for 2024 and 2025 down to $1.29 and $1.50, respectively, aligning its NII forecast more closely with street expectations.
The reduction in earnings projections has led to the lowered price target of $20.00 for Simmons First National's shares, while the Market Perform rating indicates that the firm does not see the stock outperforming the broader market in the near term.
InvestingPro Insights
Simmons First National Corporation (NASDAQ:SFNC) has demonstrated a commitment to shareholder returns, exemplified by a remarkable track record of raising its dividend for 12 consecutive years. This is further solidified by the company's ability to maintain dividend payments for an impressive 51 consecutive years. With a current dividend yield of 4.61%, investors looking for consistent income might find Simmons First National an attractive option.
InvestingPro Tips reveal that analysts are optimistic about the company's profitability, with 3 analysts revising their earnings upwards for the upcoming period and predictions that the company will remain profitable this year. This aligns with the bank's own reaffirmed forward guidance despite a recent earnings miss. The bank's strong operating income margin of 31.67% over the last twelve months as of Q1 2024 underscores its operational efficiency, which could be a key factor for investors assessing the bank's fundamental strength.
Notably, the company has experienced a large price uptick over the last six months, with a 32.14% total return, reflecting investor confidence and market momentum. Although the bank has faced challenges, including a decline in net interest income and a slight uptick in non-performing assets, these InvestingPro Tips suggest that Simmons First National has underlying strengths that could appeal to certain investors. For those interested in further analysis, additional tips are available on InvestingPro, and users can take advantage of the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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