On Monday, Chemung Financial Corp . (NASDAQ:CHMG) had its price target increased by Keefe, Bruyette & Woods to $52.50, up from the previous $49.00, while the Market Perform rating was maintained. The adjustment follows the company's second-quarter performance, which revealed a net interest margin (NIM) that fell short of the firm's expectations.
In the recent report, it was noted that Chemung Financial's NIM was 9 basis points below the forecast, leading to a downward revision of the earnings estimates for the years 2024 and 2025 by 2% and 4%, respectively. This revision is based on the anticipated lower NIM trajectory post the second-quarter results. Despite the shortfall, an expansion in NIM is still expected in the second half of 2024.
The firm's analyst pointed out that the decrease in net interest income (NII) was somewhat mitigated by reduced expenses. The favorable expense levels seen in the second quarter are projected to continue, which has contributed to the updated price target. Additionally, Chemung Financial is on course to achieve a robust return on tangible common equity (ROTCE) of 11.9% for the year 2025.
Furthermore, the company is expected to rebuild its capital to normalized levels by the fourth quarter of 2025. The new price target of $52.50 is based on 1.3 times the forward tangible book value (TBV) and 10 times the estimated earnings for 2025. The Market Perform rating reflects the firm's outlook on the stock's performance relative to the broader market.
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