On Thursday, DA Davidson set a new stock price target for Flushing Financial Corp (NASDAQ:FFIC), increasing it to $16.00 from the previous $14.00. Despite the higher target, the firm has decided to maintain a Neutral rating on the bank's stock.
The adjustment comes after Flushing Financial reported a pre-provision net revenue (PPNR) that surpassed expectations, attributed to improved net interest income (NII), fees, and operating expenses. The company demonstrated significant deposit growth at a 39% annualized rate and a moderate loan growth of 2%.
Moreover, there was a net interest margin (NIM) expansion of 5 basis points, and a slight increase in net charge-offs (NCOs) to 18 basis points. However, the analyst noted that the credit metrics of the company remain strong.
Following the release of these results, Flushing Financial's shares saw a 2% rise in comparison to the KRX index. The positive NIM has led to an upward revision of the 2024 estimates and reinforced confidence in the high projections for 2025. The robust deposit growth offers the potential to reduce borrowings or expand average earning assets, with further NIM expansion anticipated.
The company's confidence is evident in its investments in new branches and talent acquisition, aiming to achieve a 10% return on equity (ROE). Despite these positive developments, DA Davidson cites weak profitability projections over their forecast period and limited upside to their price target as reasons for maintaining a Neutral stance on Flushing Financial's stock.
In other recent news, Flushing Financial Corporation reported a robust third quarter, marking their strongest performance in seven years. The company announced GAAP earnings per share at $0.30 and core earnings at $0.26.
Notably, net interest income rose by 6.6%, and net interest margin improved by five basis points. In the midst of a challenging operating environment, the bank is focusing on credit discipline and expanding net interest margins for long-term profitability.
The company's liquidity remains strong with $3.9 billion on hand and uninsured deposits accounting for 15%. In addition, Flushing Financial is optimistic about growth potential in the Asian markets and aims to enhance customer loyalty through community involvement.
The bank targets a 10% return on tangible common equity over the cycle and anticipates further expansion of net interest margin as funding costs stabilize and loans reprice higher. Despite acknowledging a challenging rate environment, the bank maintains a positive outlook, expecting stable loan balances and an improved funding mix.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Flushing Financial Corp's (NASDAQ:FFIC) performance and outlook. The company's stock has shown remarkable strength, with a 46.87% price total return over the last three months and a significant 52.91% return over the past six months. This aligns with DA Davidson's observation of the stock's recent rise following positive financial results.
InvestingPro Tips highlight that Flushing Financial has maintained dividend payments for 29 consecutive years, underscoring the company's commitment to shareholder returns. This consistent dividend history may be particularly appealing to income-focused investors in the current economic climate.
Moreover, the company's P/E ratio stands at 20.79, with a Price to Book ratio of 0.79 as of the last twelve months ending Q3 2024. These metrics provide context to DA Davidson's valuation considerations and their decision to maintain a Neutral rating despite raising the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Flushing Financial Corp, providing deeper insights into the company's financial health and market position.
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