On Monday, Truist Securities adjusted its outlook on shares of Seacoast Banking Corporation (NASDAQ:SBCF), reducing the price target to $28 from the previous $30 while keeping a Hold rating on the stock. The adjustment follows the company's third-quarter results, which prompted revisions to the core earnings per share (EPS) estimates for the years 2024 and 2025.
The revised estimates for Seacoast Banking's core EPS are now $1.45 for 2024 and $1.67 for 2025, marking an increase of 2% and 4% respectively. These changes are primarily due to expected higher net interest income (NII), stemming from increased deposit beta assumptions extending through 2025.
Analysts at Truist forecast that Seacoast Banking will experience moderate expansion in its net interest margin (NIM) and NII over the coming quarters. This outlook is based on the bank's balance sheet, which is currently sensitive to liabilities.
Moreover, the potential benefits of fixed-rate repricing are expected to become more significant due to an anticipated acceleration in loan growth and the possibility of a steeper yield curve.
The bank's expense initiatives are projected to curb expense growth in 2024 and 2025. These efforts are set to position Seacoast Banking for a considerable pre-provision net revenue (PPNR) growth of 10% in 2025. Despite these positive developments, the firm's analysis suggests that the stock is trading at a premium multiple of 15.7 times the estimated 2025 EPS, indicating that the shares are nearing a fair valuation.
The new price target of $28 reflects a multiple of 16.8 times the projected EPS for 2025, down from the previous target of $30. This reevaluation by Truist Securities comes as the financial institution continues to navigate the evolving economic landscape.
In other recent news, Seacoast Banking Corporation reported an earnings beat with an earnings per share (EPS) of $0.36, exceeding expectations by $0.01, and a core pre-provision net revenue (PPNR) of $45.6 million, surpassing both Consensus and Stephens' projections.
The corporation also saw a 7% annualized increase in both loans and customer deposits and a significant rise in net income to $30.7 million. Stephens raised the price target for Seacoast Banking to $26, up from $25, while maintaining an Equal Weight rating on the stock.
The bank's net interest margin (NIM) showed a modest quarter-over-quarter decrease, but the core NIM improved by 3 basis points to 2.90%, with further increase expected in the upcoming quarter. Seacoast Banking's loan growth was 6.6% on a last quarter annualized basis, surpassing the 5.0% expected by Stephens.
Despite facing challenges due to recent hurricanes, the corporation expressed confidence in its growth trajectory and shareholder value enhancement. The bank is open to future mergers and acquisitions opportunities, prioritizing strong organic growth. These are among the recent developments at Seacoast Banking Corporation.
InvestingPro Insights
Adding to Truist Securities' analysis, recent data from InvestingPro provides further context on Seacoast Banking Corporation's (NASDAQ:SBCF) financial position. The company's market capitalization stands at $2.23 billion, with a P/E ratio of 19.37, slightly higher than the adjusted P/E ratio of 15.34 for the last twelve months as of Q3 2024. This aligns with Truist's observation of the stock trading at a premium multiple.
InvestingPro Tips highlight that SBCF has raised its dividend for 4 consecutive years, which may appeal to income-focused investors. The current dividend yield is 2.73%, offering a steady income stream. However, it is worth noting that the company is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 1.75, suggesting the stock might be somewhat overvalued in relation to its growth prospects.
Despite challenges such as weak gross profit margins, SBCF remains profitable, with analysts predicting continued profitability this year. This supports Truist's expectation of moderate expansion in net interest margin and income.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights, with 5 more tips available for SBCF on the platform.
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