On Monday, Piper Sandler increased its price target on First Interstate Bancsystems (NASDAQ:FIBK) sharesto $37.00, up from the previous target of $32.00. The firm has maintained an Overweight rating.
The adjustment follows a revision of the estimated earnings per share (EPS) for the years 2024 and 2025. Piper Sandler now expects EPS to reach $2.37 and $2.50, respectively, an increase from the prior estimates of $2.10 and $2.15. This change is attributed to a higher net interest margin (NIM), which is forecasted to expand beginning in the second quarter of 2024 and continue throughout the year.
The new price target of $37.00 represents a $5.00 increase and is based on a 15.0 times multiple of the firm's projected 2025 earnings per share. This valuation is in line with Piper Sandler's targeted multiple for Glacier Bancorp (NYSE:GBCI), which is set at 18.0 times.
The firm's analyst expressed optimism due to the core NIM performing better than expected, and noted that First Interstate Bancsystems has reaffirmed its full-year 2024 net interest income (NII) guidance, anticipating a mid-single digit decline. Despite a forecasted lower NII, the expansion of NIM is expected to commence in the second quarter and carry on through the year.
Additionally, Piper Sandler highlighted the company's commitment to its dividend, which currently yields 7.0%, considering it relatively attractive for investors. The maintained Overweight rating suggests that the firm continues to view the stock favorably in light of these developments.
InvestingPro Insights
As Piper Sandler raises its price target for First Interstate Bancsystems, it's important to consider the broader financial context provided by InvestingPro. With a market capitalization of $2.86 billion and a P/E ratio standing at 10.78, FIBK shows a value-oriented profile. The adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly higher at 11.11, reflecting recent market conditions. Despite a revenue contraction of 9.86% over the last twelve months as of Q1 2024, FIBK maintains a substantial dividend yield of 6.96%, which is noteworthy for income-focused investors.
Two InvestingPro Tips that are pertinent to the article's discussion include FIBK's high shareholder yield and the fact that three analysts have revised their earnings upwards for the upcoming period, signaling potential confidence in the company's financial prospects. These insights complement Piper Sandler's optimistic outlook and may further justify the Overweight rating and the increased price target. For those looking to delve deeper into FIBK's financials and uncover additional insights, there are more InvestingPro Tips available, which can be accessed with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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