On Wednesday, Stephens, a financial services firm, adjusted its price target for BOK Financial (NASDAQ: BOKF), bringing it down to $114 from $116, while keeping an Equal Weight rating on the stock. The adjustment follows the company's third-quarter results for the year 2024, which showed strong net interest income (NII), fees in line with expectations, and a lower loan loss provision expense, contributing to earnings per share (EPS) that surpassed consensus forecasts.
Despite the positive aspects of the quarterly report, analysts noted a contraction in loan balances, attributing it to lower utilization rates from commercial and industrial (C&I) and energy customers. However, there is an expectation for an improvement in these trends in 2025. The revised guidance for 2024 suggests better near-term trends for NII and net interest margin (NIM), although this is tempered by projections of softer fee income.
The firm's updated forecast anticipates a mid-single-digit growth in pre-provision net revenue (PPNR) for 2025 and 2026. This outlook is based on the belief that BOK Financial is well-positioned to achieve positive operating leverage, assuming a stable macroeconomic environment and a steady decline in interest rates.
The new price target of $114 is based on 13 times the firm's 2026 EPS forecast and 1.5 times the 12-month trailing book value per share (TBVPS). Despite the slight reduction in the price target, Stephens maintains an Equal Weight rating on BOK Financial shares, indicating a neutral stance on the stock's near-term performance.
InvestingPro Insights
To complement Stephens' analysis of BOK Financial (NASDAQ: BOKF), recent data from InvestingPro offers additional perspective on the company's financial health and market performance. As of the last twelve months ending Q3 2024, BOKF reported a revenue of $2,004.87 million, with an operating income margin of 35.25%. This robust margin aligns with the strong net interest income noted in the quarterly results.
InvestingPro Tips highlight that BOKF has maintained dividend payments for 20 consecutive years and has raised its dividend for 10 consecutive years. This consistent dividend history supports the company's financial stability, which could be reassuring for investors in light of the anticipated softer fee income mentioned in the article.
The company's P/E ratio (adjusted) stands at 13.86, suggesting a relatively attractive valuation compared to the broader market. This valuation metric, coupled with the analysts' expectation of profitability this year, as indicated by another InvestingPro Tip, reinforces the Equal Weight rating maintained by Stephens.
It's worth noting that BOKF has shown a remarkable 52.55% price total return over the past year, significantly outperforming many of its peers. This strong performance aligns with the firm's positive outlook on BOK Financial's potential for achieving positive operating leverage in the coming years.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into BOKF's financial position and future prospects.
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