On Wednesday, Piper Sandler increased its price target for Nicolet Bankshares (NASDAQ:NCBS) (NYSE: NIC (NASDAQ:EGOV)) to $104 from the previous $86, while maintaining a Neutral rating on the stock. The adjustment follows Nicolet Bankshares' robust second-quarter performance, which showcased a 1.3% return on assets (ROA) and a 16.8% return on tangible common equity (ROTCE).
The company's pre-provision net revenue (PPNR) exceeded expectations by 15%, driven by a combination of strong net interest income (NII), solid balance sheet growth, core fee income, and well-managed operating expenses.
Nicolet Bankshares' asset quality metrics continue to be top-tier in the industry. The firm endorses Nicolet Bankshares as an attractive long-term investment due to its defensible and superior profitability profile.
This advantage is attributed to the bank's capacity to capture market share and generate appealing organic growth, a favorable credit outlook, and the potential for capital flexibility. These factors may enable the bank to re-engage in successful mergers and acquisitions as it approaches the $10 billion asset threshold, compared to its $8.6 billion in assets as of June 30.
The financial institution's premium valuation is cited as the reason for the maintained Neutral stance, despite the increased price target. Piper Sandler has also raised its 2024 and 2025 operating earnings per share (EPS) estimates for Nicolet Bankshares by 7% and 5%, respectively, to $7.30 and $6.95, due to higher net interest income expectations.
The new price target of $104 represents an $18 increase and is based on a 15.0 times multiple of the firm's 2025 earnings estimate. This valuation reflects a greater premium relative to the bank's peers, who are trading at an average of 11.2 times earnings, and is justified by Nicolet Bankshares' strong performance and favorable position in the current economic environment.
In other recent news, Nicolet Bankshares has been the subject of several analyst reports. Keefe, Bruyette & Woods maintained a Market Perform rating for Nicolet Bankshares and acknowledged the company's recent announcement of a 12% increase in its dividend, now set at $0.28 per share. This move reflects the bank's commitment to returning capital to its investors and confidence in its financial stability.
Stephens revised its price target for Nicolet Bankshares, lowering it to $88 from the previous $92, while maintaining an Equal Weight rating. This followed Nicolet's first-quarter earnings report for 2024, which exceeded expectations with an operating earnings per share of $1.72. However, the bank saw a decrease in non-interest-bearing deposits during the quarter.
Piper Sandler also adjusted its outlook on Nicolet Bankshares, lowering the bank's price target to $82.50 from the previous $88.00, but keeping a Neutral rating. The firm acknowledged the bank's strong core fee income and favorable credit metrics but noted a compression in its net interest margin and a smaller average earning assets base.
InvestingPro Insights
Following Piper Sandler's price target increase for Nicolet Bankshares, current InvestingPro data provides additional insight into the company's financial health and stock performance. With a market capitalization of $1.39 billion, Nicolet Bankshares has demonstrated a notable revenue growth of 29.53% in the last twelve months as of Q1 2024. The robust growth is further highlighted by a quarterly revenue surge of 156.33% in Q1 2024.
InvestingPro Tips suggest that Nicolet Bankshares is trading at a low P/E ratio of 12.21 relative to its near-term earnings growth, indicating potential undervaluation. Additionally, the stock has shown significant returns, with an impressive 11.76% increase over the last week and an 18.54% rise over the past month. These metrics underscore the company's strong momentum, which may interest investors looking for growth opportunities.
It's important to note that the stock is trading near its 52-week high, at 99.42% of this threshold, reflecting the market's positive reception to Nicolet Bankshares' performance. For investors seeking more comprehensive analysis and additional InvestingPro Tips, they can explore further at https://www.investing.com/pro/NIC. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 6 additional tips available on InvestingPro that can provide investors with a deeper understanding of Nicolet Bankshares' potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.