On Wednesday, Piper Sandler adjusted its stance on First Bank (NASDAQ:FRBA), reducing the price target to $15 from the prior $16 while sustaining an Overweight rating on the stock. The adjustment follows First Bank's first-quarter earnings report for 2024, which showed earnings per share (EPS) of $0.50. When accounting for a Bank-Owned Life Insurance (BOLI) death benefit and normalizing the tax rate, the core EPS was calculated at $0.45. This core figure surpassed both the analyst's and the consensus estimates by $0.03.
The report highlighted that a negative provision recognized in the quarter was the main variance from the forecast, contributing $0.06 to the EPS. This was somewhat balanced by a $0.01 decrease in net interest income (NII) and a $0.01 rise in operating expenses. Consequently, pre-provision net revenue (PPNR) fell short of expectations by $0.02.
The bank's financial results for the first quarter of 2024 included an unexpected benefit from the BOLI death benefit, which influenced the reported earnings. However, when this one-time factor was excluded, the core earnings still outperformed the anticipated results. The negative provision taken was not anticipated in the initial models and served as the key difference from the projections.
Piper Sandler's revised price target reflects the latest financial figures and the bank's performance in the quarter. Despite the adjustments made in the financial modeling, the firm continues to hold a positive view on First Bank's stock, as indicated by the Overweight rating.
The new price target of $15 indicates Piper Sandler's valuation expectation for First Bank's shares following the recent earnings report and the bank's current financial position. The Overweight rating suggests that the firm expects the stock to outperform the average return of the stocks covered in the sector over the next 12 to 18 months.
InvestingPro Insights
In the wake of Piper Sandler's price target adjustment for First Bank (NASDAQ:FRBA), InvestingPro data and insights offer additional context for investors considering the bank's stock. With a market capitalization of $309.23 million and a P/E ratio that has adjusted to a more attractive 11.48 based on the last twelve months as of Q4 2023, First Bank appears to be positioned for potential growth. The bank also boasts a solid operating income margin of 39.08%, reflecting efficient management and profitability.
InvestingPro Tips suggest a positive outlook, noting that net income is expected to grow this year, with analysts predicting profitability. This is further supported by three analysts revising their earnings upwards for the upcoming period, which may signal confidence in the bank's financial trajectory. Additionally, the bank has been profitable over the last twelve months, reinforcing the positive sentiment.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, which can be explored further at https://www.investing.com/pro/FRBA. To enhance your investing strategy with these expert insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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