On Thursday, Citizens Financial Group (NYSE:CFG) shares saw its price target increased to $46.00 from $42.00 by Baird, while the firm kept an Outperform rating on the stock.
The adjustment followed Citizens Financial's second quarter earnings report, which revealed earnings per share (EPS) of $0.82, beating the consensus estimate of $0.79.
The company's quarter included several non-core items that affected its financials, such as approximately $3 million in integration and efficiency-related expenses, around $5 million in special assessment charges from the Federal Deposit Insurance Corporation (FDIC), and nearly $24 million in one-time charges related to turnaround and other operations (TOP).
Baird noted that the core pre-provision net revenue (PPNR) for Citizens Financial increased by roughly 2% quarter-over-quarter, although it was down 19% year-over-year.
The firm highlighted that the core PPNR trends were slightly better than anticipated, largely due to higher than expected fee income and well-managed core expenses, excluding TOP-related costs.
Despite a lower guidance for net interest income (NII) in the third quarter of 2024, Baird expressed confidence in the long-term prospects of Citizens Financial Group. The firm cited the stock's current trading value at approximately 1.35 times tangible book value (TBV) as a favorable risk/reward situation for investors.
In other recent news, Citizens Financial Group has been the focus of several analysts' adjustments. RBC Capital Markets raised their price target for Citizens Financial to $43 from $35, maintaining an Outperform rating, while DA Davidson increased their target to $46 from $41, upholding a Buy rating. Morgan Stanley also lifted their target from $38 to $41, maintaining an Equalweight rating on the stock.
Citizens Financial has reported strong earnings and revenue results, including a net interest margin of 2.91% and a 3% growth in fees. The bank's recent acquisitions of HSBC and ISBC, and the establishment of Citizens Private Bank, are seen as strategic moves to enhance profitability and drive growth.
The company has also undergone a corporate restructuring, redeeming all outstanding shares of its 6.350% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D.
Leadership transitions include the resignation of Jack Read, the Corporate Controller and Chief Accounting Officer, with John F. Woods serving as the interim replacement, and the appointment of Jim Weiss as the new Florida market president.
Despite facing pressure from higher deposit costs and Federal Reserve policies, the bank has managed to maintain a robust Common Equity Tier 1 ratio of 10.6%. Analysts from Deutsche Bank and Citi have reaffirmed their Buy ratings on the company, while Piper Sandler upgraded the stock to 'Overweight' from 'Neutral'. These recent developments highlight the company's strategic initiatives and financial stability.
InvestingPro Insights
Following Baird's recent price target increase for Citizens Financial Group (NYSE:CFG), current metrics from InvestingPro show a robust financial outlook for the company. With a market capitalization of $18.62 billion and a P/E ratio standing at 15.11, CFG presents a stable investment profile. Notably, the P/E ratio has seen a slight adjustment to 14.25 when considering the last twelve months as of Q1 2024, indicating a potential undervaluation of the stock.
InvestingPro Tips highlight that analysts have recently revised their earnings upwards for the upcoming period, reflecting optimism about the company's performance. Additionally, the stock's strong returns over the last month and three months, at 17.69% and 25.89% respectively, corroborate Baird's positive stance. With a dividend yield of 4.11% and a history of maintaining dividend payments for 11 consecutive years, CFG offers an attractive proposition for income-focused investors.
For readers looking to delve deeper into Citizens Financial Group's prospects, there are additional InvestingPro Tips available, which can be accessed through the company's profile on Investing.com. To enhance your research, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of financial data and expert analysis.
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