On Thursday, DA Davidson adjusted its stock price target for First Busey (NASDAQ:BUSE), a financial services company, reducing it to $26.00 from the previous $27.00. Despite this change, the firm maintained a Neutral rating on the stock.
The adjustment follows First Busey's recent earnings report, which, according to the analyst, surpassed expectations primarily due to clean credit rather than significant growth or revenue surprises. The company benefited from favorable asset quality trends, which led to a lower provision expense that helped to balance out the flat spread income results.
The analyst from DA Davidson indicated that while the current growth rates might be moderate, there is an expectation for First Busey's growth engine to gain momentum in 2025. Additionally, the diversity of fee income is anticipated to contribute positively to the company's financial performance.
The firm also revised its earnings per share (EPS) estimate for 2025 downward, citing a forecast of lower loan balances at the start of the year as the reason for the adjustment. Despite the reduction in the price target, DA Davidson's stance remains neutral, with the new $26 price target reflecting the updated expectations.
In other recent news, First Busey Corporation declared a quarterly cash dividend of $0.24 per share. The company also announced a merger with CrossFirst Bankshares (NASDAQ:CFB), which is expected to add $7.6 billion in assets, $6.3 billion in loans, and $6.7 billion in deposits to First Busey's portfolio.
Financial services firm Stephens downgraded First Busey's stock from Overweight to Equal Weight, lowering the price target to $27 from the previous $28, following investor reactions to the acquisition.
Piper Sandler maintained its Overweight rating on First Busey shares, while DA Davidson maintained a neutral stance with a revised price target of $24. The merger, valued at approximately $916.8 million, is anticipated to enhance First Busey's competitive edge in the banking sector, particularly in wealth management offerings.
The completion of the acquisition is expected in the first half of 2025. Once finalized, the combined entity is projected to operate with approximately $20 billion in assets, $15 billion in loans, and $17 billion in deposits. These recent developments reflect First Busey Corporation's strategic growth and commitment to shareholder value.
InvestingPro Insights
Recent InvestingPro data provides additional context to DA Davidson's analysis of First Busey (NASDAQ:BUSE). The company's P/E ratio of 12.73 suggests a relatively modest valuation, which aligns with the analyst's neutral stance. First Busey's dividend yield of 3.89% and its 36-year streak of maintaining dividend payments, as highlighted by an InvestingPro Tip, may appeal to income-focused investors despite the lowered price target.
While DA Davidson anticipates growth momentum in 2025, current InvestingPro data shows a slight revenue decline of 0.94% over the last twelve months. However, the quarterly revenue growth of 9.27% in Q3 2024 indicates a potential turnaround, supporting the analyst's expectation of future improvement.
An InvestingPro Tip notes that First Busey suffers from weak gross profit margins, which could be a factor in the analyst's cautious outlook. On the positive side, another InvestingPro Tip confirms that analysts predict the company will be profitable this year, aligning with DA Davidson's overall neutral rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for First Busey, providing a deeper understanding of the company's financial health and market position.
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