On Thursday, Midland States Bancorp's (NASDAQ:MSBI) price target was reduced to $23.00 from $25.00 by DA Davidson, while the firm maintained a Neutral rating on the stock. This adjustment comes as a result of lowered expectations for net interest income (NII) and an anticipated increase in credit costs.
The financial institution is facing challenges that prompted the revision of its earnings per share (EPS) forecast. "Due to a lower NII outlook and higher credit costs, we have lowered our EPS forecast as well as trimmed our price target to $23," stated the DA Davidson analyst. Credit quality trends are a particular area of concern for the analyst.
Despite these challenges, there is a silver lining as the core pre-provision net revenue (PPNR) results are showing some potential. The analyst noted this aspect of the business, indicating that it could be a positive sign amidst the prevailing issues.
However, the firm believes that until there is a consistent improvement in asset quality, the current valuation of Midland States Bancorp's shares trading near tangible book value (TBV) is justified. This stance reflects a cautious perspective on the bank's stock until more robust signs of recovery in asset quality are evident.
InvestingPro Insights
Amidst the revised outlook by DA Davidson, Midland States Bancorp (NASDAQ:MSBI) presents a mixed picture according to the latest data and insights from InvestingPro. The company shows a high shareholder yield, which is a positive signal for investors looking for returns. This is complemented by a history of raising dividends for 8 consecutive years, indicating a commitment to returning value to shareholders.
The InvestingPro data reveals a modest market capitalization of $505.55 million and a P/E Ratio that stands at an attractive 8.71, adjusted to 8.55 for the last twelve months as of Q1 2024. This suggests that the stock may be undervalued compared to earnings. Additionally, the dividend yield as of the latest data point stands at a compelling 5.39%, which could catch the eye of income-focused investors.
However, it's important to note that 4 analysts have revised their earnings expectations downwards for the upcoming period, which may warrant caution. While analysts predict the company will be profitable this year, the recent revenue growth figures show a decline, with a -11.87% change over the last twelve months as of Q1 2024. This could be a point of concern for potential growth investors.
For those interested in a deeper analysis, there are more InvestingPro Tips available for MSBI, which could provide further insights into the company's financial health and future prospects. Make sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking the full suite of InvestingPro's analytical tools and insights.
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