On Thursday, Business First Bancshares (NASDAQ:BFST) received an upgrade from Raymond (NS:RYMD) James, moving from Market Perform to Outperform, with a new price target set at $30.00. The upgrade reflects a positive outlook on the company's financial performance and growth potential.
The bank's recent acquisition of Oakwood Bancshares is cited as a key factor in its projected profitability, which is expected to surpass that of its peers. Additionally, Business First Bancshares' net interest margin (NIM) and net interest income (NII) trajectory appear solid, along with a decent loan growth outlook. The bank's presence in Texas, with approximately 35% of its loans and 17% of its deposits in the state, contributes to its improving franchise and scarcity value.
Despite its year-to-date (YTD) underperformance, with a modest 4.1% increase compared to the broader market gains of 16.5% and 23.1% for the BANK and S&P 500 indices respectively as of December 18, 2024, Raymond James views the company's fundamentals favorably.
The bank's credit metrics stand out against its peers, and its efficiency ratio is lower than that of its competitors. Furthermore, consensus estimates indicate that the bank's expense growth in 2026 is projected to be below that of its peers.
However, the bank does have areas where it lags behind its peers, including a lower concentration of demand deposit accounts (DDAs) and low-cost core deposits, a higher loan/deposit ratio, and lower capital ratios and loan loss reserve (LLR) ratios. Despite these concerns, Raymond James believes that Business First Bancshares is well-positioned for continued growth, both organically and through potential mergers and acquisitions, and sees the stock as attractive compared to its peers after the recent outperformance of bank stocks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.