On Friday, Piper Sandler adjusted its outlook on Univest Financial Corporation (NASDAQ: UVSP), increasing the price target to $27 from the prior $27 while maintaining a Neutral rating. The adjustment follows Univest Financial's third-quarter earnings report, which revealed earnings per share (EPS) of $0.63. This figure surpassed both Piper Sandler's estimate of $0.56 and the consensus estimate of $0.54.
The earnings beat was attributed to several factors, including lower provisioning and reduced expenses, which exceeded expectations by $0.06 and $0.04 respectively. However, these positive impacts were slightly offset by a decrease in fee income by $0.02 and an increase in the tax rate by $0.01. The net interest margin (NIM) saw a slight contraction of 2 basis points, contrary to Piper Sandler's forecast of a 3 basis point expansion. This was mainly due to higher balance sheet liquidity, but net interest income (NII) met expectations.
The analyst pointed out that the quarter was viewed positively, noting improvements in credit quality and pre-provision net revenue (PPNR) trends that were $0.02 better than modeled. While loan growth was modest at 0.7%, falling short of the 2% growth Piper Sandler had anticipated, deposit growth was strong at 5.5%, driven by seasonal municipal inflows.
Moreover, Univest Financial exceeded Piper Sandler's forecast in terms of share repurchases, buying back 157,000 shares compared to the 50,000 shares that had been projected. The company's performance in the third quarter suggests a solid financial position, reflected in the revised price target from Piper Sandler.
In other recent news, Univest Financial Corporation reported a net income of $18.6 million for the third quarter of 2024, with earnings per share standing at $0.63. The company experienced a significant increase in deposits, mostly from seasonal public funds, and a modest loan growth. Non-interest income also saw a healthy rise, primarily due to the performance of the wealth management and insurance sectors. In addition to these financial developments, Univest continued its share repurchase program, buying back a substantial number of shares.
Univest Financial anticipates a loan growth of approximately 4% for 2024, however, they also project a contraction of net interest income by 4% to 5%. The company's management team has indicated a strategic focus on managing expenses and capital deployment, including continued share repurchases. Despite the competitive pressures in the deposit market, Univest's deposit and loan portfolios are positioned to potentially benefit from loan repricing.
InvestingPro Insights
Building on Piper Sandler's positive outlook for Univest Financial Corporation (NASDAQ: UVSP), recent data from InvestingPro provides additional context to the company's financial performance and market position.
UVSP's stock is currently trading near its 52-week high, with a remarkable 74.28% price total return over the past year. This aligns with the analyst's optimistic view and the company's strong third-quarter performance. The stock's P/E ratio of 10.95 suggests it may be undervalued compared to industry peers, potentially offering an attractive entry point for investors.
InvestingPro Tips highlight UVSP's commitment to shareholder returns. The company has maintained dividend payments for 46 consecutive years and has raised its dividend for 3 consecutive years. With a current dividend yield of 2.97%, UVSP offers a steady income stream for investors. This consistent dividend history underscores the company's financial stability, which is further supported by its profitability over the last twelve months.
While the article mentions modest loan growth, InvestingPro data shows that UVSP's revenue for the last twelve months stands at $288.32 million, with an impressive operating income margin of 33.58%. This robust profitability metric suggests efficient operations, which could contribute to the company's ability to maintain its dividend policy and engage in share repurchases, as noted in the article.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for UVSP, providing a deeper understanding of the company's financial health and market position.
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