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South State shares get price target bump on earnings estimates

EditorNatashya Angelica
Published 25/10/2024, 15:44
SSB
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On Friday, Piper Sandler showed confidence in South State Corporation (NYSE:NYSE:SSB) shares, raising its price target to $112 from $110, while keeping an Overweight rating on the stock. The firm's decision came after reviewing South State's third-quarter results of 2024, which led to an increase in earnings estimates for the years 2024 to 2026.

The new earnings estimates are set at $7.00, $7.85, and $9.35 for the years 2024, 2025, and 2026, respectively. These figures are up from the previous estimates of $6.73, $7.63, and $9.00. The upward revision is attributed to South State's effective expense management, the potential for further loan loss reserve releases, and the benefits arising from the bank's liability-sensitive balance sheet as it approaches the end of 2025.

Piper Sandler's positive outlook is also bolstered by the recent transaction with Independent Bank (NASDAQ:INDB) of Texas (IBTX), which is expected to enhance the liability sensitivity of South State's balance sheet on a pro forma basis. The firm emphasizes South State's distinct position as a high-quality, high-profitability bank that has a unique liability-sensitive characteristic.

The stock price target of $112 is based on a roughly 13 times price-to-earnings ratio on the firm's 2026 earnings estimate, which has been discounted back one year. Piper Sandler's analysis suggests that South State's strategic operations and recent developments continue to make it an attractive investment, leading to the decision to maintain an Overweight rating on the shares.

In other recent news, SouthState Corporation reported a solid financial performance in its Q3 2024 Earnings Call. The company revealed growth in loans, deposits, revenue, and earnings per share, along with a positive projection for 2025, expecting mid-single-digit growth and an improving yield curve.

The ongoing merger with Independent Financial, slated for completion by summer 2025, was also highlighted. Despite a slight dip in the net interest margin due to higher deposit costs, SouthState anticipates an expansion in the fourth quarter and a stabilizing to declining trend in deposit costs.

Non-interest income was reported at $75 million, slightly above expectations, and a net release of $7 million in the provision for credit losses indicates strong asset quality. The bank also intends to decrease the percentage of residential loans on its balance sheet post-merger.

These recent developments underscore SouthState Corporation's strategic approach towards growth amidst economic challenges.

InvestingPro Insights

South State Corporation's recent performance and future prospects align well with the positive outlook presented by Piper Sandler. According to InvestingPro data, the company's market capitalization stands at $7.48 billion, with a P/E ratio of 14.91, indicating that the stock is trading at a reasonable valuation relative to its earnings.

InvestingPro Tips highlight that South State has raised its dividend for 13 consecutive years and has maintained dividend payments for 28 consecutive years. This consistent dividend history underscores the company's financial stability and commitment to shareholder returns, which complements Piper Sandler's confidence in the stock.

The company's revenue growth of 10.39% in Q3 2024 and a strong operating income margin of 44.45% for the last twelve months support the analyst's positive earnings revisions. Additionally, the stock has shown a significant price total return of 56.13% over the past year, reflecting investor confidence in South State's performance and strategy.

It is worth noting that InvestingPro offers 6 additional tips for South State Corporation, providing investors with a more comprehensive analysis of the company's financial health and market position. To gain access to these insights and more detailed financial metrics, consider exploring the full range of data available on InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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