On Friday, Piper Sandler adjusted its outlook on HarborOne Bancorp (NASDAQ:HONE), reducing the price target from $15.00 to $13.00 while maintaining a Neutral rating for the stock. The revision follows HarborOne Bancorp's third-quarter 2024 earnings report, which disclosed earnings per share (EPS) of $0.10. However, after adjusting for discrete tax benefits to normalize the tax rate, the core EPS was calculated at $0.08.
This figure fell short of expectations, coming in $0.11 below Piper Sandler's estimate and $0.10 beneath the consensus of other analysts. The earnings miss was largely due to a $4.7 million specific reserve set aside for an office loan that shifted to nonaccrual status. In addition, three substantial office loans were reclassified to classified status.
The bank's core results indicated a return on assets (ROA) of 23 basis points and a return on tangible common equity (ROTCE) of 2.5%. The analyst from Piper Sandler expressed concern over the market's reaction to credit surprises, suggesting that HarborOne's stock might continue to struggle in the current trading session.
The analyst's commentary highlighted the sensitivity of the market to unexpected credit events and the potential impact on HarborOne Bancorp's stock performance. Given these developments, the firm's outlook on the stock remains cautious.
In other recent news, HarborOne Bancorp has announced a quarterly cash dividend of $0.08 per share, a continuation of the company's practice of providing returns to its shareholders. This dividend is set for distribution to shareholders on record by mid-October 2024. HarborOne Bancorp's decision aligns with its strategic financial management, though future payouts could be influenced by various economic and market conditions. In addition to its traditional banking services, HarborOne offers educational resources and mortgage lending services across New England and other states.
In other developments, Piper Sandler raised HarborOne Bancorp's stock target price, maintaining a neutral stance despite potential ongoing mortgage banking headwinds across the industry. This decision followed HarborOne Bancorp's strong recent quarter and noticeable improvement in asset quality. Piper Sandler expressed a positive long-term outlook for HarborOne Bancorp, anticipating a rise in core profitability once the Federal Reserve reduces rates.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on HarborOne Bancorp's financial situation. The company's market capitalization stands at $478.47 million, with a P/E ratio of 48.5. This high earnings multiple, as highlighted by an InvestingPro Tip, suggests that investors are pricing in significant future growth expectations, which may be challenging given the recent earnings miss and credit concerns.
InvestingPro data also reveals that HarborOne's revenue for the last twelve months as of Q3 2024 was $158.66 million, with a concerning revenue growth decline of -8.01% over the same period. This aligns with another InvestingPro Tip indicating that analysts anticipate a sales decline in the current year, which could further pressure the stock's valuation.
On a positive note, despite recent challenges, HarborOne remains profitable over the last twelve months, with a dividend yield of 2.78%. This suggests that the company is still generating returns for shareholders, although the sustainability of dividends may come into question if credit issues persist.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for HarborOne Bancorp, providing a deeper understanding of the company's financial health and market position.
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