On Wednesday, Keefe, Bruyette & Woods adjusted its stock price target for Hanmi Financial (NASDAQ:HAFC) Corporation, traded on NASDAQ:HAFC, reducing it to $18.00 from the previous target of $18.50. Despite this change, the firm maintained its Market Perform rating on the stock.
The revision follows Hanmi Financial's first-quarter performance, which fell short of both the market's and Keefe, Bruyette & Woods' expectations, particularly in pre-provision net revenue (PPNR). The company reported a quarter-over-quarter decrease of 5% in net interest income (NII). While the quarter did see a modest provision that helped earnings surpass the all-in forecast, an accelerated compression in the net interest margin (NIM) was notable.
Management at Hanmi Financial has expressed optimism about a potential positive change in the NIM towards the end of the second quarter or the beginning of the third quarter. Still, the lower margin at the end of the first quarter and the anticipated delay in the margin inflection have prompted Keefe, Bruyette & Woods to adopt a more cautious forward-looking perspective.
Despite the challenges, Hanmi Financial is taking measures to mitigate the impact. The company is focusing on controlling expenses and is actively engaging in share buybacks when opportunities arise. In light of the recent earnings and the subsequent adjustments in expectations, Keefe, Bruyette & Woods has also lowered its earnings estimates for 2024 and 2025 by 3-4%. The firm reaffirms its Market Perform rating, indicating a neutral stance on the stock's outlook.
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