On Thursday, Keefe, Bruyette & Woods adjusted its outlook on Seacoast Banking Corporation (NASDAQ:SBCF), reducing the price target from $28.00 to $26.00 while maintaining a Market Perform rating. The decision came after an analysis of the bank's recent performance, which indicated a decline in net interest margin (NIM) due to loan shrinkage and strong deposit growth.
The bank's Pre-Provision Net Revenue (PPNR) was slightly below expectations by $0.03 per share. Despite the 3% quarter-over-quarter decrease in loans, Seacoast Banking saw a significant increase in its loan pipeline towards the end of the quarter. Additionally, deposits grew by 8% from the previous quarter. The firm also noted Seacoast Banking's positive commentary on customer acquisition trends, which are expected to contribute to higher loan growth in the medium to long term.
Keefe, Bruyette & Woods has revised its earnings estimates for Seacoast Banking for the years 2024 and 2025 to $1.42 and $1.55, respectively. The adjustment primarily reflects the anticipated lower Net Interest Income (NII). The new price target reflects these updated estimates, with the bank's shares currently trading at 15.1 times the 2025 earnings estimate and 1.54 times the tangible book value.
The analyst highlighted the bank's stable Non-Interest Bearing Deposits (NIBDs) and generally clean credit quality. Additionally, Seacoast Banking successfully executed another small bond restructuring during the period in question, which is part of its ongoing efforts to manage its portfolio effectively.
InvestingPro Insights
Seacoast Banking Corporation (NASDAQ:SBCF) has shown a commendable commitment to shareholder returns, having raised its dividend for three consecutive years. This is a positive signal for investors looking for stable income, especially when considering the bank's dividend yield stood at a solid 3.06% as of the latest data. The company's market performance has also been noteworthy, with a year-to-date price total return of -16.78%, but an impressive one-year price total return of 22.84%, reflecting resilience over a longer horizon.
On the earnings front, while there have been downward revisions by analysts for the upcoming period, Seacoast Banking is still expected to be profitable this year, continuing its trend from the last twelve months. The bank's current P/E Ratio stands at 17.11, which adjusts to a slightly more favorable 14.46 when looking at the last twelve months as of Q1 2024. This could suggest that the stock is reasonably valued in the context of its earnings.
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