On Friday, Keefe, Bruyette & Woods made an adjustment to the price target for S&T Bancorp Inc. (NASDAQ:STBA), decreasing it to $34 from the previous $35, while maintaining a Market Perform rating on the stock.
The revision followed the company's recent earnings report, which indicated a lower provision and, to a lesser extent, improved net interest income (NII) that contributed to the earnings beat. However, pre-provision net revenue (PPNR) fell short of Keefe, Bruyette & Woods' expectations by $0.02 per share, attributed to higher expenses, some of which were seasonal, and fees.
The firm highlighted that S&T Bancorp's financial performance is currently influenced by its asset sensitivity, which results in a 2-3 basis points drag on the margin for each 25 basis point rate cut.
This sensitivity to interest rate changes is a key factor in the firm's decision to revise its earnings estimates for S&T Bancorp for the years 2024 and 2025, reducing them by 1% and 6%, respectively. The more significant reduction for 2025 is based on a more conservative view of the net interest margin (NIM).
The Keefe, Bruyette & Woods analyst pointed out that their earnings estimates were initially 3-4% higher than the consensus estimates before the quarterly results were released. The latest revisions are likely to bring their projections closer to the consensus among other analysts.
The update to the price target reflects the firm's current stance on S&T Bancorp's stock, reiterating a Market Perform rating, which suggests that they anticipate the stock to perform in line with the broader market. The new price target of $34 represents the firm's expectation of where the stock price may head in the near future.
InvestingPro Insights
In light of the recent price target adjustment for S&T Bancorp Inc. (NASDAQ:STBA) by Keefe, Bruyette & Woods, it's worth noting some key metrics and insights from InvestingPro. With a Market Cap of approximately $1.12 billion and a P/E Ratio sitting at 8.27, S&T Bancorp presents an interesting valuation picture. The company's dividend yield is notably high at 4.5%, reflecting a commitment to shareholder returns, underscored by its history of raising its dividend for 36 consecutive years.
Two InvestingPro Tips that stand out are the analysts' downward revisions of earnings for the upcoming period and the expectation of net income to drop this year. These insights may be particularly relevant for investors considering the firm's asset sensitivity and the impact of interest rate changes on its financial performance.
For a deeper dive into S&T Bancorp's financials and for more InvestingPro Tips, investors can explore InvestingPro's platform. Currently, there are 7 additional tips available on InvestingPro for STBA, which can be accessed at https://www.investing.com/pro/STBA. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a more comprehensive analysis to support investment decisions.
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