On Monday, First Interstate Bancsystems (NASDAQ:FIBK) saw its stock price target increased to $38.00 from $37.00 by Piper Sandler, while the firm maintained an Overweight rating on the stock. The adjustment follows a revision of earnings per share (EPS) estimates for the years 2024 and 2025, with expectations now set at $2.38 and $2.55, respectively. This is an increase from the previous estimates of $2.37 and $2.50.
The revised price target represents a modest $1.00 increase and is based on a 15.0 times multiple of the projected 2025 earnings per share. This valuation approach is consistent with the targeted multiple for Glacier Bancorp (NYSE:GBCI), which is set at 18.0 times. Piper Sandler's decision to raise the target is partly due to a reduction in non-interest expenses (NIE), which is somewhat balanced by anticipated weaker fee revenues.
First Interstate Bancsystems is also recognized for its commitment to maintaining its dividend, which currently yields 5.84%. The company aims to continue supporting its dividend payout ratio, which stands at 81%.
Moreover, Piper Sandler acknowledges the company's positive outlook regarding net interest margin (NIM) expansion, noting that First Interstate Bancsystems' net interest income (NII) guidance aligns with the firm's previous forecasts.
In other recent news, First Interstate Bancsystems reported a second-quarter operational earnings per share (EPS) of $0.58, exceeding expectations. The company's pre-provision net revenue (PPNR) saw a growth of 6.1%, mainly due to an increase in the core net interest margin (NIM). Stephens, an investment firm, raised the price target for the company's shares from $32.00 to $36.00, retaining an Overweight rating.
In terms of company developments, First Interstate Bancsystems announced the planned retirement of its President and CEO, Kevin P. Riley, initiating a search for a successor led by a globally recognized executive recruiting firm. The company's guidance also indicates potential similar quarterly increases in the second half of the year, despite an expected decrease in non-interest bearing deposits.
Moreover, First Interstate Bancsystems reported a Q1 net income of $58.4 million, or $0.57 per share. The bank also made strategic adjustments to its balance sheet, including the departure of $185 million in high-cost municipal deposits, which is expected to benefit its interest-bearing deposit costs. These are among the recent developments that highlight the company's efforts to navigate financial challenges and prepare for future growth and stability.
InvestingPro Insights
With First Interstate Bancsystems' (NASDAQ:FIBK) recent price target increase by Piper Sandler, investors might consider the broader financial health and market performance of the company. According to InvestingPro data, FIBK has a market capitalization of $3.38 billion and a Price/Earnings (P/E) ratio of 13.26, which is adjusted to 13.39 on a last twelve months basis as of Q2 2024. This P/E ratio indicates a potentially attractive valuation relative to earnings.
Furthermore, the company's commitment to dividends is underscored by a substantial dividend yield of 5.81% as of the latest data, with an impressive track record of maintaining dividend payments for 15 consecutive years, reflecting a reliable income stream for investors.
InvestingPro Tips highlight that despite weak gross profit margins, FIBK has been trading near its 52-week high and has shown strong returns over the last month and three months. Additionally, analysts predict profitability for the year, which aligns with Piper Sandler's positive outlook on the company's financial performance.
For those interested in a deeper analysis, InvestingPro offers several additional tips on FIBK, providing a comprehensive investment picture. To access these insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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