On Monday, Piper Sandler adjusted its outlook on First Hawaiian (NASDAQ:FHB) shares, increasing the price target to $27 from $22 while maintaining a Neutral rating on the stock. The revision comes after the firm reviewed First Hawaiian's second-quarter 2024 financial results, which led to several changes in their forecast.
The analyst at Piper Sandler noted modifications to their projections, including a less optimistic margin outlook and a reduction in the earning asset base, which is expected to decrease net interest income (NII). Despite these adjustments, the analyst's 2024 earnings per share (EPS) estimate increased by $0.08 to $1.78. This increment is modest, being only $0.01 higher after considering the second-quarter performance. However, the EPS estimate for 2025 has been lowered by $0.10 to $1.75.
The decision to raise the price target is also influenced by the recent uptick in peer multiples. The new target represents a 15.4 times multiple of the firm's 2025 EPS estimate, an increase from the previously projected 12.9 times multiple of their 2024 EPS estimate.
The updated price target of $27 indicates Piper Sandler's response to both First Hawaiian's recent quarterly outcomes and the broader market conditions affecting the banking sector's valuation. The firm's analysis reflects a careful consideration of various financial factors that could impact First Hawaiian's stock value in the near term.
In other recent news, First Hawaiian Inc . has reported a robust financial performance for the first quarter of 2024, registering a net income of $54.3 million. The company's earnings were buoyed by a significant increase in net interest income and strategic balance sheet optimization. Among the highlights of the quarter were the sale of $526 million in investment securities and the pay down of $470 million in higher-cost public time deposits.
However, the bank also recorded a $6.3 million provision for credit losses, indicating a slight deterioration in credit quality. First Hawaiian Inc. is currently contemplating share buybacks after navigating the current uncertain period.
The company is also focusing on acquiring new checking accounts and increasing non-interest bearing deposits. It expects net interest margin expansion from $1.5 billion of fixed-rate loans and $600 million of securities maturing this year. These are recent developments for First Hawaiian Inc., which continues to navigate the financial landscape.
InvestingPro Insights
Following Piper Sandler's updated assessment of First Hawaiian (FHB), InvestingPro data and tips offer additional context for investors. The company's market capitalization stands at $3.34 billion USD, with a Price-to-Earnings (P/E) ratio of 15.02, reflecting market sentiment and valuation.
Notably, First Hawaiian has a track record of maintaining dividend payments, having done so for 9 consecutive years, which may appeal to income-focused investors. The dividend yield is currently an attractive 3.98%, as of the last dividend ex-date on May 17, 2024.
InvestingPro Tips highlight that First Hawaiian is trading near its 52-week high, with the price at 99.69% of this peak, and has experienced strong returns over the last month and three months, at 25.72% and 22.79% respectively. Analysts predict the company will be profitable this year, which is supported by a profitable performance over the last twelve months. However, investors should be mindful of the weak gross profit margins, which may impact future profitability.
For those who seek a deeper analysis, InvestingPro offers additional insights and metrics on First Hawaiian, including more InvestingPro Tips. To explore these, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With these tools at your disposal, you can make more informed decisions about your investment in First Hawaiian.
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