On Thursday, Raymond (NS:RYMD) James made a bullish move by upgrading shares of Origin Bancorp (NYSE:NYSE:OBK) shares from Outperform to Strong Buy. Accompanying this upgrade, the firm also increased the price target to $40.00, a raise from the previous $35.00. According to InvestingPro data, the stock has experienced a significant 8.2% decline over the past week, though it maintains a solid dividend track record with increases for six consecutive years.
The upgrade comes as the analyst anticipates a positive turnaround in Origin Bancorp's performance in the upcoming fourth-quarter earnings of 2024, scheduled for January 22, 2025. The optimism is based on strategic initiatives that the company hinted at during its last earnings call.
These strategies are aimed at addressing the company's fundamental underperformance and aligning it with its peers' return on assets (ROA) levels, which currently stands at 0.77%. InvestingPro's analysis indicates the company's overall financial health score is FAIR, with detailed insights available in the comprehensive Pro Research Report.
Among the actions Origin Bancorp is expected to take are expense reductions, which may include workforce downsizing and the closure of underperforming branches. The company has been assessing staff profitability and branch performance as part of this cost-cutting measure.
In addition to expense management, the firm is looking at balance sheet optimization. This could involve the redemption of subordinated debt that becomes callable in 2025 and possibly restructuring its securities portfolio, aiming for an earnback period of 2.5 years or less.
Lastly, the analyst noted that Origin Bancorp is exploring ways to enhance revenue. Although this is seen as a longer-term strategy, it is part of the comprehensive approach that the company is taking to improve its financial standing and market performance.
The combined effect of these strategies is expected to contribute to a more robust financial outlook for Origin Bancorp, as reflected in the upgraded rating and price target. InvestingPro subscribers can access additional insights, including 12+ ProTips and extensive financial metrics, to make more informed investment decisions.
In other recent news, Origin Bancorp recently disclosed its third-quarter earnings, revealing a 2.3% increase in total deposits and a rise in non-interest-bearing deposits by 1.5%. The company's loan portfolio health also improved, with past dues and nonperforming loans decreasing to 0.49% and 0.81% respectively. However, the company's net interest income and net interest margin experienced a miss due to higher deposit costs.
DA Davidson adjusted the stock price target for Origin Bancorp to $38.00, maintaining a buy rating despite the company's disappointing net interest margin and net interest income. The firm cited the bank's strong presence in the Texas market and significant deposit growth as positive factors. In contrast, Stephens raised their price target for Origin Bancorp to $38.00, emphasizing the company's effective cost management and core loan yield growth.
Origin Bancorp has also made changes to its board, appointing Cecil Jones, a seasoned financial professional, adding value to the company's financial reporting and regulatory compliance. This comes as the company's assets have grown from $4.2 billion at its public inception in 2018 to nearly $10 billion. These recent developments reflect Origin Bancorp's strategic initiatives and ongoing efforts to optimize its financial performance.
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