On Wednesday, Keefe, Bruyette & Woods adjusted their outlook on Peoples Bancorp (NASDAQ:PEBO), reducing the stock's price target from $36.00 to $33.00 while retaining a Market Perform rating. The firm's assessment followed the release of the company's first-quarter results, which were characterized by a significant slowdown in core net interest margin (NIM) compression and well-managed expenses.
The bank's performance in the first quarter indicated robust results, prompting the firm to maintain its 2024 forecasts with only a slight downward revision to non-interest income expectations. This revision led to a modest increase in the firm's 2024 earnings per share (EPS) estimates for Peoples Bancorp.
Still, looking ahead to 2025, the firm anticipates a potential negative impact on the bank's margins due to expected Federal Reserve rate cuts. With over half of the bank's loans being variable rate, and deposit repricing likely to lag, the firm adjusted its 2025 EPS estimates downward.
The firm's decision to lower the price target reflects these anticipated challenges but does not alter the overall Market Perform rating for Peoples Bancorp. The bank reiterated most of its guidance for 2024, indicating a steady outlook for the near term.
Keefe, Bruyette & Woods' updated price target and maintained rating come as investors consider the potential effects of monetary policy changes on the banking sector. Peoples Bancorp's first-quarter performance has shown resilience, but future interest rate movements remain a key factor for the bank's earnings trajectory.
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