On Friday, Piper Sandler, a well-known financial firm, adjusted its outlook on Amerant Bancorp Inc (NYSE:NYSE:AMTB), increasing the price target to $29.00 from the previous $26.50. The firm maintained an Overweight rating on the stock, indicating a positive view on its future performance.
The revision in the price target follows the firm's updated earnings estimates for Amerant Bancorp for the years 2024 to 2026. The new estimates are set at $1.26, $2.15, and $3.00 for each consecutive year, raised from the earlier projections of $1.21, $2.10, and $2.60, respectively. The firm's analysis suggests a favorable outlook based on several factors, including anticipated double-digit loan growth, a higher net interest margin (NIM) trajectory, and reduced credit costs in the second half of 2025.
Piper Sandler's confidence in Amerant Bancorp's forward expenses, credit costs, and loan growth trajectory contributed to the raised price target. However, the firm expressed a slight reservation about the potential upside to the NIM in 2025. Despite this, the new price target is set at approximately 11 times the firm's increased 2026 earnings estimate, discounted back one year.
The firm's commentary indicated that for investors to value Amerant Bancorp higher, the bank will need to demonstrate stability and improvement in credit quality metrics and overall credit costs. Piper Sandler suggests that the earnings floor may have been reached for Amerant Bancorp and that the future focus will likely be on the degree of successful execution rather than the direction of change.
In other recent news, Amerant Bancorp reported a Q3 loss of $48.2 million, primarily attributed to a strategic repositioning of the company's investment portfolio and real estate losses. Despite the loss, the company's core pre-provision net revenue remained strong at $31.3 million, and total assets increased to $10.38 billion. Amerant Bancorp also completed a public offering of 8.7 million shares, raising $165 million.
In recent developments, Amerant Bancorp is focusing on growth and community support in the aftermath of recent hurricanes and is preparing for the opening of new banking centers in Florida. The company aims to enhance liquidity and fee income through asset management growth and is targeting a 60% efficiency ratio, 1% return on assets, and 12% return on equity by the second half of 2025.
Furthermore, Amerant Bancorp is expanding its presence in Florida with new banking centers and is focusing on alternative funding sources to positively impact the cost of funds into 2025. The company's management expects a normalized charge-off rate of 30 to 40 basis points by 2025, with a temporary increase in the fourth quarter.
InvestingPro Insights
To complement Piper Sandler's analysis, recent data from InvestingPro provides additional context for Amerant Bancorp's financial situation. The company's market capitalization stands at $866.74 million, with a price-to-book ratio of 0.96 as of the last twelve months ending Q3 2024, suggesting the stock might be undervalued relative to its book value.
InvestingPro Tips highlight some challenges faced by Amerant Bancorp. The company has not been profitable over the last twelve months, which aligns with Piper Sandler's focus on future earnings improvement. Additionally, Amerant suffers from weak gross profit margins, which could explain the firm's emphasis on the need for improved execution.
On a more positive note, analysts predict that the company will be profitable this year, supporting Piper Sandler's optimistic outlook and raised earnings estimates. This projection is particularly relevant given that two analysts have revised their earnings downwards for the upcoming period, indicating a mixed sentiment among market observers.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Amerant Bancorp, providing a deeper dive into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.