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Bank First shares price target lifted, rating reiterated on solid Q2 results

EditorNatashya Angelica
Published 18/07/2024, 16:50
BFC
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On Thursday, Piper Sandler adjusted its stock price target for Bank First National Corp. (NASDAQ:BFC), increasing it to $99 from the previous $84, while maintaining a Neutral rating on the shares. The firm's decision follows Bank First's release of its second-quarter results, which, despite a net interest income (NII) shortfall due to seasonal funding mix shifts, were strong overall.

The results were marked by a 5% positive pre-provision net revenue (PPNR) surprise, supported by robust core fee income, controlled operating expenses, and growth in higher-yielding Main Street Division (MSD) loans accompanied by full client relationships.

The firm anticipates that Bank First will continue to exhibit top quartile profitability and build capital at rates superior to its peers, which could support further mergers and acquisitions that are well-received by the market. Moreover, Bank First is expected to maintain net charge-offs (NCOs) at levels significantly lower than those of its peers.

In light of these expectations, Piper Sandler has also raised its operating earnings per share (EPS) estimates for Bank First for 2024 and 2025 by 3%, setting them at $6.10 and $6.20 respectively. The new price target of $99 reflects a 16.0 times multiple on the firm's 2025 earnings estimate, which represents a wider premium over peers' average of 11.2 times. This adjustment is justified by Bank First's superior performance attributes in the current market environment.

The new stock price target also considers Bank First's current valuation premium, which stands at 2.2 times tangible book value (TBV) and 14.9 times/14.6 times the firm's 2024 and 2025 earnings estimates, respectively. The premium is deemed appropriate given Bank First's financial metrics and market performance.

In other recent news, Bank First National Corp. has seen an adjustment in its stock target by Piper Sandler, which lowered it from $90 to $87 while maintaining a neutral rating. This change comes in light of Bank First's first-quarter performance, which Piper Sandler characterized as mixed due to a 12% shortfall in pre-provision net revenue. This shortfall was linked to a less-than-anticipated net interest margin expansion and an increased deposit cost.

Despite these hurdles, Bank First's earnings per share for the quarter exceeded expectations, buoyed by a tax benefit and substantial share buybacks. Piper Sandler remains optimistic about the bank's net interest margin outlook, which is underpinned by strong organic growth in loans and deposits, continued credit quality, and cost discipline.

Piper Sandler acknowledged Bank First as a reliable long-term holding, highlighting its various characteristics and positive prospects for future acquisitions. The neutral rating was sustained due to Bank First's current premium valuation, which is 1.9 times tangible book value and 13.0 times/12.7 times Piper Sandler's estimated earnings for 2024 and 2025.

Piper Sandler has kept its earnings per share estimates for Bank First at $5.90 for 2024 and $6.00 for 2025. The revised price target of $87 mirrors a multiple of 14.5 times the firm's estimated 2025 earnings, a decrease of 0.5 times due to lower peer multiples. These are the recent developments surrounding Bank First.

InvestingPro Insights

Bank First National Corp. (NASDAQ:BFC) is currently trading at a low P/E ratio of 11.81, which is attractive relative to its near-term earnings growth. This alignment indicates that the stock could be undervalued given its future earnings potential. Moreover, the company has demonstrated significant returns, with a 7.79% increase over the last week and a robust 20.07% over the last three months, reflecting strong investor confidence and market performance.

InvestingPro Tips highlight that Bank First has maintained dividend payments for 15 consecutive years, a testament to its financial stability and commitment to shareholder returns. With a dividend yield of 1.54% and a notable dividend growth of 16.67% over the last twelve months as of Q2 2024, the company presents an appealing case for income-focused investors.

For readers seeking to delve deeper into Bank First's financial health and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/BFC. By using the coupon code PRONEWS24, users can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further insights that could guide investment decisions. Currently, InvestingPro offers a total of 9 additional tips for Bank First National Corp., providing a comprehensive analysis of the company's financial standing and market potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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