On Wednesday, Keefe, Bruyette & Woods adjusted its price target for NBT Bancorp (NASDAQ:NBTB), a financial services company, reducing it to $39 from the previous $41 while maintaining a Market Perform rating. The change reflects concerns over higher expenses that were reported in the first quarter and are expected to persist, influencing projections for the coming years.
The firm noted that NBT Bancorp's core pre-provision net revenue (PPNR) fell short by $0.05 per share due to these increased expenses. Consequently, earnings estimates for 2024 were reduced by 6% to $2.75 per share, and those for 2025 by 7% to $3.02 per share. Despite this, NBT Bancorp's shares saw a rise of 3.5% today, outperforming their Keefe, Bruyette & Woods Regional Banking Index (KRX) peers, which increased by 1.0%.
Keefe, Bruyette & Woods expressed surprise at the stock's performance given the anticipated impact of the higher expense outlook on consensus estimates. Nevertheless, the firm recognized NBT Bancorp's potential to maintain a strong return on tangible common equity (ROTCE) of 13% and benefit from increased economic activity within its market regions in the long term.
The revised price target of $39 is based on 1.6 times forward tangible book value (TBV) and 14 times the projected earnings for both 2024 and 2025. Keefe, Bruyette & Woods concluded that the current valuation premium of NBT Bancorp adequately reflects these factors, justifying the decision to leave the Market Perform rating unchanged.
InvestingPro Insights
As investors consider Keefe, Bruyette & Woods' revised price target for NBT Bancorp (NASDAQ:NBTB), it's worth noting the company's financial health and market performance through the lens of InvestingPro's real-time data and insights. NBT Bancorp boasts a robust market capitalization of $1.7 billion, with a steady P/E ratio of 13.44, reflecting investor confidence in its earnings potential. The company has demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 39 consecutive years and raising its dividend for the last 11 years. This is underscored by a significant return over the last week, with a 9.09% price total return, showcasing recent investor enthusiasm.
Despite concerns over increased expenses and reduced earnings estimates, NBT Bancorp's dividend yield remains attractive at 3.55%. This aligns with the InvestingPro Tip highlighting the company's high shareholder yield. Additionally, analysts predict profitability for the year, which, when coupled with the company's historical performance, suggests potential for ongoing financial stability. For those looking to delve deeper, there are additional InvestingPro Tips available that can provide further insight into NBT Bancorp's financial nuances.
For a more comprehensive analysis and to access exclusive InvestingPro Tips, investors can visit https://www.investing.com/pro/NBTB. To enhance your investing strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With several more InvestingPro Tips available on the platform, investors can gain a richer understanding of NBT Bancorp's market position and future prospects.
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