On Tuesday, Keefe, Bruyette & Woods analysts upgraded First Citizens BancShares (NASDAQ:FCNCA) stock from "Market Perform" to "Outperform," setting a price target of $2,500. This upgrade reflects a renewed confidence in the bank's stock, citing several factors for the positive outlook.
The analysts pointed to a series of recent developments that prompted the upgrade. They noted the impact of the strong jobs report released last Friday, as well as the Federal Reserve's December decision, which they referred to as a "hawkish cut."
Additionally, a 7% decline in First Citizens BancShares' stock price and revised earnings projections for 2025 that are now 6% above consensus have contributed to the analysts' decision to recommend a more bullish position on the bank. The company maintains a strong financial profile, with InvestingPro reporting a "GREAT" overall Financial Health Score and a conservative P/E ratio of 11.9x.
Keefe, Bruyette & Woods analysts believe that the upcoming earnings report, scheduled for release next Friday, January 24, will serve as a catalyst for the stock. They anticipate a positive surprise in 2025 net interest income (NII) based on the forthcoming report. The analysts have also provided a range of earnings per share (EPS) scenarios for 2025, along with a refreshed analysis of the potential upside and downside for the stock.
The upgrade by Keefe, Bruyette & Woods comes after a period of observation where the analysts had previously stepped back from a more optimistic rating of First Citizens BancShares. Six weeks after adopting a neutral stance, their reassessment has led to a more favorable view of the bank's stock prospects.
First Citizens BancShares is expected to reveal more details that could influence its stock performance in the next earnings report. Investors and market watchers will likely be looking forward to seeing whether the analysts' predictions align with the financial outcomes presented by the bank.
In other recent news, First Citizens BancShares has been the subject of multiple analyst assessments and has delivered strong Q3 2024 results. Truist Securities initiated coverage on the company with a Hold rating, highlighting the company's asset-sensitivity and its unique strengths, such as a proven track record of successful mergers and acquisitions. Meanwhile, Deutsche Bank (ETR:DBKGn) initiated coverage with a Buy rating, citing potential benefits from regulatory changes and expected growth in its SVB Commercial segment.
In contrast, Citi maintained a Neutral rating on First Citizens BancShares, suggesting a balanced outlook due to the stock's premium valuation and limited upside potential. The bank has shown strong performance year-to-date, despite consensus earnings per share estimates for 2025 having decreased by 19%.
First Citizens BancShares also reported robust Q3 2024 results, with an adjusted earnings per share of $45.87 and a resilient net interest margin of 3.53%. The bank plans to maintain a solid capital ratio and continue share buybacks. Looking ahead, the bank forecasts flat to low single-digit loan growth for the fourth quarter of 2024, with year-end loans expected to be in the $138 billion to $140 billion range, and deposits projected between $150 billion and $153 billion. These recent developments reflect the bank's strong financial performance and strategic initiatives.
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