On Thursday, Keefe, Bruyette & Woods adjusted its outlook on Blue Foundry Bancorp (NASDAQ:BLFY), reducing the stock price target from $9.00 to $8.00 while maintaining a Market Perform rating. The adjustment follows the company's first-quarter results, which presented a mixed financial picture.
The firm acknowledged that Blue Foundry Bancorp's first-quarter performance was bolstered by a negative provision and an improved core pre-provision net revenue (PPNR) due to lower expenses and a rebound in net interest margin (NIM). Still, it was noted that these decreases in expenses are expected to reverse in the second quarter, with NIM likely to face compression again in the near term.
Despite minor adjustments to the overall estimates, with 2024 earnings expectations shifting to a loss of $0.79 per share from a previously anticipated loss of $0.85, and 2025 projections adjusting to a loss of $0.66 from $0.63, the firm sees a limited path to near-term profitability for Blue Foundry Bancorp. The analyst cited the need for time, higher growth, and an improved yield curve as necessary factors to significantly increase NIM.
The report concluded with a cautious outlook on the bank's stock, indicating that given the current headwinds to profitability, there is limited potential for share price appreciation in the near term. The revised stock price target of $8.00 reflects a forward tangible book value (TBV) multiple of 55%.
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