On Monday, Keefe, Bruyette & Woods made an adjustment to the price target for MetroCity Bankshares Inc. (NASDAQ: NASDAQ:MCBS), raising it to $34 from the previous $32 while maintaining a Market Perform rating on the stock.
The firm's decision follows MetroCity Bankshares' consistent demonstration of leading profitability and robust capital levels across various market cycles. The bank's forward-looking performance indicators are expected to remain strong, with a return on assets (ROA) forecast at 1.8%, return on tangible common equity (ROTCE) at 15%, and an anticipated growth from 11% in the third quarter over the next two years.
MetroCity Bankshares is currently trading at a premium compared to its peers, with a tangible book value (TBV) multiple of 1.9 times versus the 1.5 times median for small to midsize (SMID) banks. This premium reflects the bank's favorable position and the market's positive reception of its financial health and growth prospects.
The price target increase also takes into account a slight outperformance in the third quarter of 2024, where MetroCity Bankshares exceeded expectations by $0.01 per share. Despite this beat, the firm's estimates for the bank's financial performance remain largely unchanged.
The analyst from Keefe, Bruyette & Woods highlighted the bank's strong outlook, stating, "MCBS has generated leading profitability while maintaining strong levels of capital through different parts of the cycle. We see this continuing as we look through 2026 with ROA at 1.8%, ROTCE at 15%, and building from 11% in Q3 over the next 2 years." This view underpins the rationale for the revised price target, signaling confidence in MetroCity Bankshares' trajectory for the coming years.
In other recent news, MetroCity Bankshares, Inc. has added a new member to its Board of Directors, Mr. John Paek. He is set to bring a vast array of experience to the board, with a professional history that includes roles at Deloitte Tax LLP and Baker McKenzie LLP. Despite his impressive qualifications, it's been noted that Mr. Paek does not meet the independence criteria under NASDAQ's listing rules, due to his familial connection to the company's leadership.
Mr. Paek will join the Asset Liability Committee, the Credit Risk Management Committee, and the Directors’ Loan Committee of the Bank. As for his remuneration, he will receive the same compensation as his fellow board members, as outlined in the company's Definitive Proxy Statement filed earlier this year.
InvestingPro Insights
Recent data from InvestingPro reinforces Keefe, Bruyette & Woods' positive outlook on MetroCity Bankshares Inc. (NASDAQ: MCBS). The company's P/E ratio of 12.94 and PEG ratio of 0.76 suggest that the stock may be undervalued relative to its earnings growth potential, aligning with the bank's premium trading position noted in the article.
InvestingPro Tips highlight MCBS's strong financial performance, including its high return over the last year and decade, which corroborates the analyst's expectations of continued profitability. The company's dividend growth of 27.78% and a current dividend yield of 2.9% further underscore its financial health and shareholder value creation.
The bank's revenue growth of 11.66% over the last twelve months and an impressive 33.58% quarterly growth support the article's projection of continued growth. Moreover, the operating income margin of 60.93% reflects the leading profitability mentioned by the analyst.
For investors seeking a deeper understanding of MCBS's potential, InvestingPro offers 7 additional tips, providing a comprehensive analysis of the company's financial position and market performance.
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