On Monday, Keefe, Bruyette & Woods adjusted their outlook on Glacier Bancorp (NYSE:GBCI), reducing the price target to $44 from the previous $47, while keeping a Market Perform rating on the stock. The firm's analysts noted that Glacier Bancorp is transitioning from a historically strong growth narrative to focusing on restructuring its balance sheet.
Despite a positive development in Glacier Bancorp's net interest margin (NIM), which rose by 9 basis points sequentially to 2.68%, the firm's analysts recognized an underestimation in the shift of the company's strategy. The analysts pointed out that Glacier Bancorp, a traditionally robust growth entity in small to mid-cap banking, is now experiencing minimal growth in earning assets. This change is cited as the main reason for a 5-6% decrease in their earnings estimates.
The analysts clarified that their previous estimates were 2% higher than the consensus before the quarterly report, suggesting that the consensus might not require significant adjustment. However, they also indicated a possibility that the consensus could lean towards a lower bias.
The revision of the price target to $44 is accompanied by a reiteration of the Market Perform rating. The analysts emphasized that Glacier Bancorp's management has maintained their expectation for the margin to exit the year around 3%.
Glacier Bancorp's current shift in focus to its balance sheet composition reflects a strategic move that departs from its historical growth trajectory, as observed by the analysts at Keefe, Bruyette & Woods. This reassessment of the company's financial strategy has led to the updated price target and earnings estimates.
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