On Wednesday, Cadence BanCorp (NYSE: CADE) stock experienced a shift in rating as Piper Sandler adjusted their stance on the company's shares from "Overweight" to "Neutral." The firm also revised the price target for Cadence BanCorp to $34.00, a slight increase from the previous target of $33.00.
The revision of the price target reflects an increase in the 2024 earnings estimate to $2.60, up from $2.57, while the 2025 earnings estimate has been reduced to $2.78 from $2.88. The new price target is based on approximately 12.25 times the firm's 2025 earnings estimate, which is an adjustment due to higher industry multiples.
The analyst cited Cadence BanCorp's year-to-date outperformance as a key reason for the downgrade to a "Neutral" rating. The bank's shares have reached new highs, and while the company remains in a strong position, the analyst sees limited potential for additional outperformance compared to its peers, especially considering the potential for modest earnings pressure from rate cuts and the low likelihood of mergers and acquisitions.
The report also suggests that the net interest margin (NIM) could see some upside in the second half of 2024 if non-interest bearing deposits (NIBDs) stabilize. Management has guided to a target of around 21% by year-end, which is an increase from the previous 20%.
Piper Sandler's move to a "Neutral" stance is also influenced by the belief that the benefits from Cadence BanCorp's recent insurance sale have been fully realized. The firm indicates that they will be on the lookout for new catalysts that could drive outperformance or for a pullback in the stock's price before reconsidering their position.
In other recent news, Cadence Bancorp has been in the spotlight for its robust financial performance. The bank reported a GAAP net income of $114.6 million and adjusted net income from continuing operations of $114.4 million in the first quarter of 2024.
The bank's loan balances saw significant growth, particularly in non-real estate and owner-occupied commercial and industrial portfolios, as well as residential mortgages. Core customer deposits also increased, contributing to the bank's solid financial performance.
Keefe, Bruyette & Woods (KBW) recently adjusted its price target for Cadence Bancorp, increasing it to $33.00 from the previous $32.00, while maintaining its Outperform rating.
The firm cited Cadence Bancorp's recent quarterly performance as the catalyst for this change, highlighting a significant beat on both earnings per share and pre-provision net revenue.
KBW's outlook remains positive, with the firm seeing potential for additional gains stemming from a more favorable non-interest bearing deposit mix than anticipated, persistently stable interest rates, robust loan growth, and the possibility of stock buybacks.
These are recent developments that suggest confidence in Cadence Bancorp's strategy and its ability to deliver shareholder value in the near term. The bank's recent performance and the revised price target from KBW underscore the firm's belief in the bank's growth trajectory and potential for profitability ahead of the broader industry's expectations for 2025.
InvestingPro Insights
Amidst the recent stock rating adjustment by Piper Sandler, Cadence BanCorp (NYSE: CADE) has shown notable financial metrics and trends worth considering. InvestingPro data reveals that Cadence has a market capitalization of $6.13 billion and is trading at a P/E ratio of 10.3, indicating a potentially attractive valuation compared to the industry. Additionally, the stock has experienced significant growth, with a 1-year price total return of 50.55%, signaling strong performance over the past year.
InvestingPro Tips highlight that Cadence BanCorp has consistently raised its dividend for 11 consecutive years and maintains a solid shareholder yield. Moreover, analysts predict that the company will be profitable this year, with net income expected to grow. These factors may be of interest to investors seeking steady income and growth potential. For those looking to delve deeper into Cadence BanCorp's prospects, InvestingPro offers a wealth of additional tips—there are 13 more tips available that could further inform investment decisions.
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