On Thursday, RBC Capital adjusted its price target for Popular, Inc. (NASDAQ:BPOP), a financial institution, reducing it to $96.00 from the previous $108.00. Despite the lower price target, the firm maintained its Outperform rating on the stock.
RBC Capital highlighted Popular, Inc.'s robust capital position, noting its 16.4% common equity tier 1 ratio. This strong capital base is seen as providing the bank with significant flexibility and the ability to capitalize on growth opportunities, especially as the Puerto Rican economy shows resilience, aided by fiscal spending from the U.S. Government.
Nevertheless, the bank's outlook for 2024 has been moderated due to a slower-than-expected growth in net interest income. Additionally, Popular, Inc.'s year-end 2025 return on tangible common equity (ROTCE) guidance was revised down to at least 12% from the previously anticipated 14%.
In the third quarter of 2024, Popular, Inc. repurchased approximately $59 million of its stock. The bank also has plans to raise its dividend to $0.70 per share in the first quarter of 2025, signaling confidence in its financial stability and commitment to returning value to shareholders.
In other recent news, Popular Incorporated reported a mixed third-quarter performance with a decrease in net income to $155 million, a $23 million drop from the previous quarter. This decline was mostly attributed to a higher provision for credit losses.
However, the company noted an increase in net interest income and significant loan growth, especially in commercial lending. The Return on Tangible Common Equity (ROTCE) target for the fourth quarter of 2025 was revised to at least 12%, a decrease from the previously projected 14%. These are among the recent developments for the company.
Despite the mixed results, the bank maintains a positive outlook, anticipating a consolidated loan growth of around 1% in Q4 2023 and a year-over-year growth in net interest income of 6% to 7% for 2024. The bank's management remains committed to achieving a long-term sustainable ROTCE of 14%.
Further guidance on the company's outlook is expected to be provided in January.
InvestingPro Insights
Recent data from InvestingPro adds depth to RBC Capital's analysis of Popular, Inc. (NASDAQ:BPOP). Despite the lowered price target, the bank's financial metrics suggest a mixed but potentially promising outlook.
InvestingPro data shows that Popular's P/E ratio stands at 13.58, indicating a relatively modest valuation compared to some peers. This aligns with RBC Capital's maintained Outperform rating, suggesting potential upside. The bank's dividend yield of 2.76% and a notable dividend growth of 12.73% in the last twelve months underscore its commitment to shareholder returns, as mentioned in the article regarding the planned dividend increase.
An InvestingPro Tip highlights that Popular has raised its dividend for 5 consecutive years, reinforcing the bank's financial stability noted by RBC Capital. Another tip points out the high return over the last year, with InvestingPro data showing a remarkable 51.46% price total return over the past year. This performance may reflect the bank's ability to navigate challenges and capitalize on opportunities in the Puerto Rican economy.
However, it's worth noting that the stock has taken a significant hit over the last week, with a -12.51% price total return, which could be related to the moderated outlook for 2024 mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Popular, Inc., providing a broader perspective on the bank's financial health and market position.
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