On Monday, Piper Sandler adjusted its stance on Capital City Bank Group (NASDAQ:CCBG) stock, downgrading it from Overweight to Neutral, despite raising the price target to $34 from $30. The revision follows Capital City Bank's second-quarter earnings, which surpassed expectations and projected lower credit costs than previously estimated.
The bank's stock has seen significant growth, outperforming the index by approximately 7% year-to-date (YTD) and 51% since January 1, 2022. Analysts at Piper Sandler believe that the stock's strong performance has already reflected the benefits of a high-interest-rate environment.
With the potential for Federal Reserve rate cuts on the horizon, the firm views the shares as more fully valued, trading at over 13 times their 2025 earnings estimate and 1.60 times the tangible book value per share (TBVPS).
Piper Sandler has adjusted its earnings estimates for Capital City Bank for the years 2024 and 2025 to $3.03 and $2.68, up from the previous estimates of $2.70 and $2.50, respectively. This increase is attributed to the company's recent financial performance and an anticipated reduction in credit costs.
The new $34 price target assumes that Capital City Bank's shares will trade at approximately 12.5 times the firm's 2025 earnings estimate. This is a slight increase from the previous multiple of 12 times, reflecting an expansion in industry multiples. Nevertheless, Piper Sandler suggests that the current valuation is near the upper end of expected industry price-to-earnings (P/E) multiples.
In conclusion, Piper Sandler recommends a more cautious approach to Capital City Bank's stock at this time, suggesting that investors may find a more favorable entry point in the future. The firm will continue to monitor the stock for any changes that could present a better investment opportunity.
InvestingPro Insights
Capital City Bank Group (NASDAQ:CCBG) has recently been the subject of analyst attention after its second-quarter earnings outperformance. According to the latest InvestingPro data, CCBG boasts a market capitalization of $603.63 million and trades at a P/E ratio of 11.8, slightly below the industry average, indicating potential value. The company's revenue growth over the last twelve months stands at 6.28%, showcasing steady financial progress.
InvestingPro Tips highlight that Capital City Bank Group has not only raised its dividend for 10 consecutive years but also maintains a solid dividend yield of 2.36%. With two analysts revising their earnings upwards for the upcoming period, there appears to be optimism about the company's future performance. Additionally, the stock has experienced a strong return over the last month, with a 25.28% total price return, signaling investor confidence.
While the stock is trading near its 52-week high and the RSI suggests it is in overbought territory, these metrics should be balanced against the company's consistent dividend payments and recent profitability. For those looking for more comprehensive analysis, InvestingPro offers additional insights and tips. To explore these and enhance your investment strategy, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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