Tuesday, Stephens analysts increased the price target on Bank OZK (NASDAQ:OZK) shares to $57 from $53, while maintaining an Equal Weight rating. The revision follows Bank OZK's fourth-quarter earnings, which surpassed expectations due to strong loan growth, particularly in the Corporate and Investment Banking (CIB) sector, and effective cost management.
According to InvestingPro data, the stock has shown remarkable momentum with a 13% return over the past week, trading near its 52-week high of $51.50. The bank, currently valued at $5.6 billion, appears fairly valued based on InvestingPro's Fair Value analysis.
Bank OZK reported a pre-provision net revenue (PPNR) of $272 million, exceeding the consensus forecast of $262 million. The bank's earnings per share (EPS) for the fourth quarter of 2024 outperformed analyst predictions, attributed to a robust loan expansion that exceeded Stephens' projections.
The bank maintains strong fundamentals with revenue growth of 8.45% and trades at an attractive P/E ratio of 8.1x. InvestingPro subscribers can access 10+ additional key metrics and insights about Bank OZK's financial performance.
The analysts at Stephens noted the bank's credit update, highlighting that larger and notable Real Estate Specialties Group (RESG) loans seem to have been de-risked. Bank OZK reevaluated approximately 46% of the RESG balances during the year 2024, leading to a weighted average loan-to-value (LTV) increase to 44%, which is a slight increase of 1% year-over-year. Moreover, the balance of substandard loans saw a marginal increase of 5%.
The stability in credit was seen as a positive sign that could enhance investor sentiment, particularly as concerns had been growing over potential further deterioration. The analysts expressed that this perceived credit stability is likely to bolster confidence in the short term.
InvestingPro data shows the bank maintains a GREAT overall Financial Health Score of 3.39, while offering a steady 3.38% dividend yield. The bank has notably maintained dividend payments for 29 consecutive years, demonstrating consistent shareholder returns.
The new price target of $57 is based on 8.5 times the Stephens analysts' 2026 earnings per share forecasts and 1.23 times their 12-month tangible book value per share (TBVPS) forecast. The Equal Weight rating suggests that Stephens' outlook on Bank OZK's stock performance aligns with their expectations for the banking sector as a whole.
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