On Tuesday, Piper Sandler adjusted its outlook on Northwest Bancshares, Inc. (NASDAQ:NWBI), lowering the stock price target to $10 from the previous $11, while maintaining a neutral stance on the stock. The firm's decision follows the bank's first-quarter financial report for the year 2024.
Northwest Bancshares posted earnings per share (EPS) of $0.23 for the first quarter of 2024. After accounting for approximately $0.1 million in restructuring charges, the core EPS was calculated at $0.24. This figure slightly exceeded the expectations of both Piper Sandler and the consensus, which were set at $0.23. The slight earnings beat was attributed to a $0.02 reduction in provisioning.
Despite the earnings surpassing estimates, Northwest Bancshares experienced a shortfall in net interest income (NII), which missed Piper Sandler's forecast by a penny. This was due to a lower than anticipated net interest margin (NIM) and balance sheet trends. The bank's management commentary, particularly regarding NIM, indicated potential near-term challenges to earnings expectations.
Still, the anticipated challenges are expected to be largely mitigated by a projected increase in the run rate following a planned securities sale. The sale was announced in conjunction with the quarterly results and is seen as a move to bolster the bank's financial position. Piper Sandler's revised price target reflects these considerations and the bank's recent performance trends.
InvestingPro Insights
Piper Sandler's recent adjustment of Northwest Bancshares' price target comes at a time when the bank is showing a mix of strengths and challenges in its financial performance. According to real-time data from InvestingPro, Northwest Bancshares is currently trading at a P/E ratio of 10.52, which is slightly lower than the last twelve months' adjusted P/E ratio of 10.05. This indicates a modest valuation relative to its earnings.
InvestingPro Tips highlight that while analysts have revised their earnings upwards for the upcoming period, the company is trading at a high P/E ratio relative to near-term earnings growth. This suggests that while expectations for future earnings are improving, the market may be anticipating slower growth compared to the bank's current earnings multiple.
Moreover, Northwest Bancshares has maintained dividend payments for 30 consecutive years, with a notable dividend yield of 7.23%, which could appeal to income-focused investors.
The bank's revenue growth over the last twelve months has been positive at 4.65%, but it has experienced a quarterly revenue decline of -4.83% in Q1 2024. Despite this, the bank remains profitable with a gross profit margin of 36.99%, and analysts predict it will remain profitable this year.
For investors looking to delve deeper into Northwest Bancshares' financial health and future prospects, InvestingPro offers additional insights and analysis. There are currently 7 more InvestingPro Tips available for Northwest Bancshares, which can be accessed through https://www.investing.com/pro/NWBI. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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