BOK Financial Corporation (NASDAQ: BOKF) received an upgrade in its stock rating from DA Davidson.
The firm shifted its stance from Neutral to Buy, citing a favorable position for the bank in a lower rate environment and confidence in the bank's earnings projections for the second half of 2024 and the year 2025.
The price target was also increased to $124.00, up from the previous target of $113.00.
The upgrade comes after a reassessment of BOK Financial's potential performance in the current economic climate. DA Davidson highlighted that the bank is well situated to benefit from lower interest rates. This reassessment has led to a stronger conviction in the bank's earnings per share estimates for the latter part of 2024 and into the next year, which are at the higher end of consensus.
The analyst pointed to the bank's revised revenue outlook in July, where BOK Financial had adjusted its expectations to account for a single rate cut in the second half of 2024, as opposed to the two cuts it had anticipated in April.
However, considering the 50 basis point rate reduction in September and the market's anticipation of further rate cuts by the end of the following year, DA Davidson expects that BOK Financial will likely issue a more optimistic revenue forecast.
In other recent news, BOK Financial reported a strong second quarter with a net income of $163.7 million, or $2.54 per diluted share. This robust performance was attributed to a diversified loan portfolio, disciplined credit quality, and strong fee income, particularly from the commercial loan segment. Additionally, the company launched a wealth management platform, which has been positively received by clients, and signaled openness to potential mergers and acquisitions.
Citi maintained its Neutral rating on BOK Financial shares, with a steady price target of $110.00. The firm's analysis suggests that while loan growth may exceed market expectations, the net interest margin trends could be softer than anticipated. Despite the potential for stronger loan growth, Citi does not foresee significant room for positive EPS revisions or multiple expansions.
RBC Capital Markets and Truist Securities also adjusted their outlooks on BOK Financial. RBC raised its price target to $114, maintaining a Sector Perform rating, while Truist Securities adjusted its price target to $112, retaining a hold rating on the stock.
On a different note, Prosperity Bancshares (NYSE:PB) faced a downgrade from Truist Securities, citing limited loan growth and a balance sheet that may be less sensitive to liabilities than commonly thought. The bank's stock was adjusted to a Hold rating from Buy, with the price target trimmed to $79 from $81.
Lastly, U.S. Treasury yields experienced a significant surge following the release of robust economic data, which diminished concerns over a potential hard economic landing. This development has lessened the market's anticipation of an aggressive interest rate cut by the Federal Reserve.
InvestingPro Insights
The recent upgrade from DA Davidson aligns with several key metrics and insights from InvestingPro. BOK Financial Corporation (NASDAQ:BOKF) is currently trading near its 52-week high, with a price that's 99.49% of its highest point over the past year. This strength is reflected in the stock's impressive performance, boasting a 49.79% total return over the last year and a substantial 28.1% return in the past six months.
InvestingPro data shows that BOKF has a P/E ratio of 15.37, which is close to the new target P/E multiple of 14.1 set by DA Davidson. The company's market capitalization stands at $7.01 billion, indicating its significant presence in the financial sector.
Two particularly relevant InvestingPro Tips highlight BOKF's dividend consistency and analyst optimism. The company has maintained dividend payments for 20 consecutive years and has raised its dividend for 10 consecutive years, demonstrating a strong commitment to shareholder returns. This aligns well with the current dividend yield of 2.01%. Additionally, 4 analysts have revised their earnings upwards for the upcoming period, supporting DA Davidson's positive outlook on the bank's future earnings.
For investors seeking a deeper understanding of BOKF's potential, InvestingPro offers 8 additional tips that could provide valuable insights into the company's financial health and market position.
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