On Monday, Piper Sandler adjusted its price target for Banc of California (NYSE: NYSE:BANC), dropping it to $19.00 from the previous $20.00, while keeping an Overweight rating on the stock. The revision followed the bank's recent filing of its 10-Q report, which included a new disclosure regarding its first-quarter earnings.
The disclosure indicated a reduction in the net loan discount accretion contribution for the first quarter of 2024 to $22.4 million, down from the initially stated $32.5 million. Consequently, Banc of California restated its reported and adjusted earnings per share (EPS) for the first quarter to $0.12 and $0.15, respectively, from the earlier figures of $0.17 and $0.19.
Piper Sandler also revised its earnings per share estimates for Banc of California for the years 2024 and 2025. The firm now expects the bank to report EPS of $1.10 in 2024 and $1.95 in 2025, which is a decrease from the previous estimates of $1.26 and $2.05 for the respective years.
Despite the lower earnings estimates and price target, the analyst firm believes that Banc of California's fourth-quarter return on assets (ROA) goal of 1.10% could still be a positive outcome for the stock if achieved. This target, according to the firm, would set the bank on a trajectory toward earning $2.00 per share in 2025.
Piper Sandler's new price target of $19.00 represents a valuation of 9.5 times the firm's estimated earnings per share for 2025. This is slightly below the peer group average of 10.2 times, reflecting the perceived integration risks and a competitive profitability outlook for Banc of California.
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