On Monday, Pacific Financial Corp. (NASDAQ:PCB) experienced a revision in its stock price target, which was lowered to $17.00 from the previous $18.00 by Piper Sandler. Despite this change, the firm maintained a Neutral rating on the shares of the financial institution.
The adjustment in the price target comes as Piper Sandler slightly increased its earnings per share (EPS) estimates for the years 2024 and 2025 to $1.71 and $1.70, respectively. The previous estimates were at $1.70 for 2024 and $1.65 for 2025. This revision was attributed to stronger fee income and improved non-interest expense (NIE) outcomes.
The new price target of $17.00 reflects an 8.5 times multiple of the firm's 2025 EPS estimate. This valuation is in line with the average of Pacific Financial Corp.'s Asian American peer group, which stands at 8.6 times. Additionally, the calculation incorporates a reduction in the excess capital consideration to $3, down from $4, with a leverage ratio of 12.7%.
Piper Sandler's revised price target suggests a blend of caution and acknowledgment of Pacific Financial Corp.'s financial performance and positioning. While the Neutral rating indicates no immediate change in the investment firm's outlook on the stock, the revised price target and EPS estimates reflect subtle shifts in the expected financial trajectory of the company.
InvestingPro Insights
Pacific Financial Corp. (NASDAQ:PCB) has shown a commitment to shareholder returns, evidenced by its track record of raising its dividend for 5 consecutive years and maintaining dividend payments for 9 consecutive years. This aligns with the firm's recent 20.0% dividend growth over the last twelve months as of Q1 2024. Investors may find the current dividend yield of 4.65% particularly attractive, especially considering the company's profitability over the same period. However, it's important to note that analysts have expressed concerns, revising earnings downwards for the upcoming period and projecting a potential drop in net income for the year.
From a valuation standpoint, Pacific Financial Corp. boasts a P/E ratio of 8.85, which is slightly lower than the adjusted P/E ratio of 8.8 for the last twelve months as of Q1 2024. This might suggest that the stock is reasonably valued in the context of its earnings. The company's Price / Book ratio of 0.78 also indicates that the stock could be undervalued relative to its assets. Despite a challenging revenue environment with a decline of 8.13% over the last twelve months as of Q1 2024, the company has managed to maintain a high operating income margin of 37.57%.
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