On Wednesday, DA Davidson adjusted its price target for shares of Preferred Bank (NASDAQ:PFBC), increasing it from $81.00 to $86.00. The firm retained a Neutral rating on the stock. The revision comes as a result of anticipated stronger top-line revenue and a higher forward net interest margin (NIM) than previously estimated. The new price target is based on a 10x multiple of the estimated 2025 tangible book value (TBV).
The updated estimates for the years 2024 and 2025 reflect a positive outlook on the bank's financial performance. The earnings estimates for 2024 have been raised from $9.68 to $9.92, and for 2025 from $8.38 to $8.63. These adjustments suggest that DA Davidson expects Preferred Bank to achieve better financial results than initially projected.
The increase in the price target indicates a change in the expected valuation of Preferred Bank's shares. The 10x multiple on the projected 2025 TBV used to set the $86.00 price target demonstrates DA Davidson's method of valuation based on the bank's tangible assets.
The decision to maintain a Neutral rating while raising the price target suggests that while DA Davidson sees improved revenue prospects for Preferred Bank, it may still have reservations that prevent a more bullish rating at this time.
In summary, the revised price target by DA Davidson reflects a more optimistic view of Preferred Bank's revenue and margin outlook for the coming years. The firm's analysis points to a potential increase in the bank's stock value, though it continues to advise a cautious stance with a Neutral rating.
InvestingPro Insights
Recent data from InvestingPro highlights that Preferred Bank (NASDAQ:PFBC) has demonstrated financial robustness that may interest investors. A notable InvestingPro Tip is that the bank has raised its dividend for 3 consecutive years, indicating a commitment to returning value to shareholders. Furthermore, analysts have revised their earnings upwards for the upcoming period, suggesting confidence in the bank’s financial growth.
According to InvestingPro Data, Preferred Bank currently holds a market capitalization of $1.06 billion, with a low P/E ratio of 7.43, which is attractive when paired with its near-term earnings growth. The bank's revenue growth for the last twelve months as of Q1 2024 stands at 7.6%, pointing to a healthy top-line expansion. Moreover, the stock has seen a significant return over the last week, with a price total return of 7.56%, and maintains a strong 1-year price total return of 57.91%.
Investors may find additional insights by accessing more InvestingPro Tips for Preferred Bank, which can be found at: https://www.investing.com/pro/PFBC. For those looking to delve deeper into these metrics and tips, InvestingPro offers a comprehensive analysis, and using the coupon code PRONEWS24 can provide an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 13 additional tips available on InvestingPro, investors have a wealth of information to guide their investment decisions.
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