On Tuesday, MetroCity Bankshares Inc. (NASDAQ:MCBS) had its price target increased to $28.00, up from $27.00, by Keefe, Bruyette & Woods while the Market Perform rating was maintained.
The adjustment reflects the bank's positive response to the extended period of higher interest rates, as it has begun to see significant benefits from the inclusion of swaps in its operations.
The bank's current financial health was highlighted, noting its high profitability with an expected return on tangible common equity (ROTCE) of 15% for the years 2024 and 2025. Additionally, MetroCity Bankshares boasts strong capital ratios, further underscoring its financial stability.
MetroCity Bankshares' stock performance is also notably strong, trading at approximately 10 times the firm's 2024 earnings estimates and 1.5 times the tangible book value (TBV). This valuation positions the bank's shares favorably compared to its closest competitors.
The firm's analyst justified the price target increase by pointing to MetroCity Bankshares' superior profitability, which supports the bank's higher valuation relative to its peers. The updated 2024 earnings estimates and the new price target reflect the bank's advantageous position in the current economic landscape.
The price target upgrade to $28.00 is based on the bank's ability to leverage higher interest rates to its benefit, as well as its strong financial metrics and favorable comparison to its peers in the market.
InvestingPro Insights
InvestingPro data provides a comprehensive picture of MetroCity Bankshares Inc. (NASDAQ:MCBS) with a market capitalization of $611.74 million and a favorable P/E ratio of 12.32, which adjusts slightly to 12.11 when looking at the last twelve months as of Q1 2024. This suggests a reasonable valuation relative to earnings. Moreover, the company has shown a consistent commitment to shareholder returns, maintaining dividend payments for 9 consecutive years and raising its dividend for the last 3 years, with a current dividend yield of 3.3%.
InvestingPro Tips indicate that analysts are optimistic about MetroCity Bankshares' profitability, forecasting the company to be profitable this year. This aligns with the company's strong stock performance, which has seen a large price uptick over the last six months, with a total return of 27.97%. Over the past year, the company's shares have delivered a high return of 54.46% to its investors.
To gain deeper insights and access more InvestingPro Tips for MetroCity Bankshares, investors can visit https://www.investing.com/pro/MCBS. There are additional tips available on InvestingPro that could further inform investment decisions. For those looking to subscribe, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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