On Tuesday, Piper Sandler sustained its Overweight rating on shares of Brookline Bancorp (NASDAQ:BRKL), with a steady price target of $10.00. Following the company's first-quarter earnings release on April 24, 2024, Brookline Bancorp's shares have experienced a notable decline. The stock has dropped 12%, a stark contrast to the 3% dip seen in its peers and the Nasdaq Bank Index, which remained stable.
The firm's analysis suggests that Brookline Bancorp's stock is currently undervalued, trading at approximately 80% of tangible book value (TBV) and around 8 times the estimated forward earnings per share (EPS) for 2025. This valuation prompted Piper Sandler to reaffirm their positive stance on the bank's shares.
The assessment by Piper Sandler comes in the wake of Brookline Bancorp's recent market performance, which has not mirrored the broader stability in the banking sector as reflected by the Nasdaq Bank Index. The bank's underperformance relative to its peers has been significant, with a 12% decline that has caught the attention of the investment firm.
According to Piper Sandler, the current trading price of Brookline Bancorp presents an attractive entry point for investors. The bank's shares are trading at a multiple that is substantially lower than its projected earnings, suggesting a potential undervaluation.
Piper Sandler's reiteration of the Overweight rating underscores their confidence in Brookline Bancorp's stock. The firm's analysts believe that despite the recent downturn in the stock's performance, the fundamentals of the bank may offer a compelling opportunity for investors looking for value in the financial sector.
In other recent news, Brookline Bancorp disclosed its financial results for the first quarter of 2024, posting a net income of $14.7 million. The company experienced a growth in total assets, but also faced a reduction in net interest margins and non-interest income. The earnings call, led by CEO Paul Perrault, highlighted the company's performance amid changing economic conditions affecting interest rates and loan demand.
Brookline Bancorp's net interest margin contracted by 9 basis points to 3.06%, causing a decline in net interest income. Non-interest income also decreased, and expenses rose due to increased compensation, benefits, and weather-related costs. The company also reported an increase in the provision for credit losses by $3.6 million.
Despite these challenges, the company is projecting loan growth for the full year to be between 1% to 4%, with deposit growth expected to be 4% to 5%. Brookline Bancorp plans to maintain its quarterly dividend at $0.135 per share. Still, the company anticipates lower margins and net interest income for the full year, with the second quarter margin projected to be between 300 and 305 basis points.
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