On Wednesday, Piper Sandler, a financial services firm, increased the price target for First Savings Financial Group (NASDAQ:FSFG) shares to $26.50, up from $20.00. The firm has maintained an Overweight rating on the stock.
The adjustment follows the company's fiscal third-quarter results, which revealed positive trends, including a 3% pre-provision net revenue (PPNR) beat. This performance was attributed to stronger net interest income (NII) and an essentially stable net interest margin (NIM), contrary to expectations of contraction.
The bank also reported solid loan growth and well-managed operating expenses. Credit metrics remained solid, and the outlook for credit quality is considered benign. Despite a disappointing quarter for the Small Business Administration (SBA) lending unit in terms of production and earnings, expectations are for a return to consistent and stronger profitability as the bank progresses with certain initiatives.
The Overweight rating reflects the analyst's view that First Savings Financial Group's improving and more consistent profitability should lead to a valuation more in line with its peers. Additionally, the bank's unique market position in the Louisville Metropolitan Statistical Area (MSA) is seen as an advantage.
Piper Sandler has also raised its fiscal year 2024 and 2025 earnings estimates to $1.75 and $2.20 per share, up 17% and 2% respectively. This revision is based on the anticipation of improved operating expense management and the positive results from the third fiscal quarter.
The new price target of $26.50 represents a 1.10 times increase over the forward twelve-month tangible book value estimate, which is a discount compared to the peer group's 1.26 times, accounting for First Savings Financial Group's below-average profitability outlook.
InvestingPro Insights
Following Piper Sandler's optimistic revision of First Savings Financial Group's (NASDAQ:FSFG) price target, recent data from InvestingPro provides a comprehensive view of the company's current financial health. With a market capitalization of $146.63 million and a P/E ratio of 16.16, FSFG presents a mixed investment profile.
Notably, the company has demonstrated a significant return over the last week, month, and three months, with price total returns of 9.04%, 20.74%, and 35.23% respectively, reflecting strong short-term performance. This aligns with Piper Sandler's positive outlook and may suggest a growing investor confidence in the stock.
InvestingPro Tips reveal that FSFG has a commendable track record of raising its dividend for 10 consecutive years, which could be seen as a testament to its financial stability and commitment to returning value to shareholders. However, analysts anticipate a sales decline in the current year, which investors should weigh against the company's recent performance gains. With a dividend yield of 2.79% and a history of maintaining dividend payments for 13 consecutive years, FSFG may appeal to income-focused investors.
For investors seeking a deeper analysis, InvestingPro offers additional insights, including an indication that the stock is currently in overbought territory according to the RSI. For those considering an investment in First Savings Financial Group, using the coupon code PRONEWS24 can provide up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further InvestingPro Tips and metrics to inform a more nuanced investment decision.
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