On Monday, Piper Sandler, a financial services firm, adjusted its outlook on shares of First Western Financial (NASDAQ:MYFW). The price target was increased to $22.00, up from the previous $20.00, while the analyst maintained a Neutral rating on the stock.
The adjustment comes after a review of the company's earnings projections for the coming years. The firm has reduced its earnings per share (EPS) estimate for 2024 to $0.96, down from the initial forecast of $1.00. This revision is attributed to the company's recent results. However, the outlook for 2025 has improved, with the EPS estimate being raised to $1.85 from the earlier $1.65, based on expectations of higher net interest income (NII).
Moreover, Piper Sandler has introduced an estimated EPS of $2.50 for the year 2026, indicating a positive long-term perspective on First Western Financial's financial performance. Despite this, the new price target of $22.00 remains conservative relative to the company's fee-heavy revenue peers, which are valued at approximately 13.5 times their expected earnings.
The caution reflected in the price target is due to a combination of factors including First Western Financial's credit overhang, weaker profitability metrics, and competitive dynamics. Nonetheless, the firm acknowledges First Western Financial's potential to expand its market share, particularly in more dynamic markets, bolstered by its relatively large wealth management platform.
In other recent news, First Western Financial has seen its stock target raised to $20 from $18 by Piper Sandler, with the firm maintaining a Neutral rating on the stock.
Piper Sandler also adjusted its anticipated EPS for the company, lowering it to $1.00 from the previous estimate of $1.25, while keeping the 2025 EPS estimate steady at $1.65. The firm cited reductions in non-interest expenses and loan loss provisions as balancing factors to the decrease in fees and net interest income.
The new price target, according to Piper Sandler, reflects a 12.0 times multiple on the estimated 2025 earnings, up from the previously used 11.0 times multiple, due to higher market multiples. However, this target still falls below that of peers with fee-heavy revenue streams, which trade at an average multiple of 13.7 times.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on First Western Financial's (MYFW) current financial position and market performance. The company's stock has taken a significant hit over the last week, with a 1-week price total return of -9.17%. This recent downturn aligns with Piper Sandler's cautious stance, despite the increased price target.
InvestingPro data reveals that MYFW is trading at a high earnings multiple, with a P/E ratio of 73.5. This valuation metric supports Piper Sandler's conservative approach to the price target, especially when considering the company's weaker profitability metrics mentioned in the analysis.
An InvestingPro Tip highlights that First Western Financial suffers from weak gross profit margins, which could be a contributing factor to the reduced 2024 EPS estimate by Piper Sandler. However, another InvestingPro Tip indicates that analysts predict the company will be profitable this year, aligning with the positive long-term perspective reflected in the 2025 and 2026 EPS estimates.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 6 additional InvestingPro Tips available for MYFW, providing a deeper understanding of the company's financial health and market position.
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