Friday, DA Davidson raised the price target for Old Second Bancorp (NASDAQ:OSBC) shares to $19.00, up from the previous $16.00, while maintaining a Buy rating on the stock.
The firm highlighted the company's strong deposit base and net interest margin (NIM), which have been overshadowed by credit issues for nearly three years. However, these issues may be improving, as suggested by the decrease in non-performing assets (NPAs) reported in the second quarter of 2024.
The analyst noted that the recent quarter's earnings per share (EPS) were consistent with expectations, but the main story is the potential turnaround in credit quality. Old Second Bancorp's loan growth is gaining momentum as the second half of 2024 approaches, and the robust NIM is seen as a key advantage for the company.
Despite the challenges faced in previous years, the bank's forward EPS outlook remains largely unchanged. The progress in resolving credit issues has been a significant factor in the decision to increase the price target. The firm's reiteration of the Buy rating and the new $19 price target reflect confidence in the bank's financial health and future performance.
In other recent news, Old Second Bancorp has reported a mixed bag in its Q1 earnings results, posting a net income of $21.3 million, or $0.47 per diluted share, impacted by a $3.5 million provision for credit losses.
Despite a decrease in net interest income by $1.5 million and a contraction in total loans, the bank's balance sheet demonstrated resilience, with a tangible common equity ratio of 9.04%. The company also announced a quarterly cash dividend of $0.05 per share, reflecting its financial stability and consistency in returning value to its shareholders.
Financial services firm, Piper Sandler, has upgraded its price target for Old Second Bancorp to $19.50, up from the previous $18.00, maintaining an Overweight rating on the stock.
This revision is attributed to the bank's proactive approach to identifying problem loans and improving credit quality. The firm also expects Old Second Bancorp's asset quality metrics to continue improving, potentially leading to the stock trading at premium multiples.
Piper Sandler's earnings per share (EPS) estimates for Old Second Bancorp for the years 2024 and 2025 remain at $1.90 and $1.70 respectively. These recent developments indicate that Old Second Bancorp is focused on maintaining stability while actively assessing and monitoring loan portfolio risks, suggesting potential for future growth.
InvestingPro Insights
As Old Second Bancorp (NASDAQ:OSBC) continues to navigate through its credit quality turnaround, recent data from InvestingPro provides a deeper financial perspective. The company boasts a strong shareholder yield, which is a positive indicator for investors looking for returns. Additionally, Old Second Bancorp has demonstrated a commitment to its dividend, maintaining payments for 9 consecutive years, a reassuring sign of financial stability and shareholder value.
On the valuation front, the company's P/E ratio stands at an attractive 8.57, suggesting that the stock may be undervalued compared to earnings. Moreover, with a price nearing its 52-week high and a robust return over the past month, momentum appears to be on the side of Old Second Bancorp. The company's profitability over the last twelve months and the analysts' prediction of continued profitability this year further support the positive outlook presented by DA Davidson.
For investors seeking more comprehensive analysis and additional InvestingPro Tips, consider exploring the full suite of insights available at Investing.com/pro/OSBC. There are currently 7 more tips to discover, which could provide a broader understanding of the company's financial landscape. Take advantage of these insights with a special offer using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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