DA Davidson has increased Heritage Commerce Corp's (NASDAQ: NASDAQ:HTBK) price target from $11.00 to $12.50 while maintaining a Buy rating on the stock even as the company faces ongoing deposit pressures.
An analyst from DA Davidson noted that Heritage Commerce's recent financial results showed pressure on the net interest margin (NIM), but despite this, the outlook remains positive. To be sure, the revised estimates take into account the current quarter's NIM pressure and a higher starting point for funding costs than anticipated.
The report from DA Davidson released on Monday suggests that an increase in loan growth beyond the mid-single-digit forecast for 2024 and 2025 could lead to potential gains in net interest income (NII) and earnings per share (EPS).
Additionally, the company's stock buyback program could contribute to these positive outcomes if it turns out to be more active than currently projected, the analyst pointed out.
Meanwhile, Keefe, Bruyette & Woods and Piper Sandler, two prominent analyst firms, have also adjusted their price targets for Heritage. Keefe raised its target for Heritage to $11.50 from $10.50, while Piper Sandler increased its target to $12.00 from $10.00.
It is important to note that Heritage Commerce's earnings per share (EPS) for the quarter fell short of estimates, due to a miss in expenses and net interest income (NII), though this was partially offset by a beat in provisions.
The net interest margin (NIM) saw a decline, but positive underlying trends were noted, such as stabilizing deposit costs and scheduled bond maturities.
InvestingPro Insights
Heritage Commerce Corp's (NASDAQ:HTBK) recent performance and future projections have caught the attention of analysts and investors alike. According to InvestingPro data, the company boasts a market cap of $646.86 million and a price-to-earnings (P/E) ratio of 13.22. Despite a decline in revenue growth of -14.38% over the last twelve months as of Q2 2024, the bank has managed to maintain a strong operating income margin of 39.07%. This resilience is also reflected in the stock's impressive total returns, with a 22.53% increase over the last month and a 35.03% surge over the last three months.
InvestingPro Tips highlight the company's ability to sustain dividend payments for 12 consecutive years, a testament to its financial stability and commitment to shareholder value, which is further underscored by a significant dividend yield of 4.88%. Furthermore, analysts remain optimistic about Heritage Commerce's profitability, projecting the company will remain profitable this year and citing a strong return over recent periods.
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