On Wednesday, Piper Sandler increased the stock price target for First Savings Financial Group (NASDAQ:FSFG) to $31.00, up from the previous $27.50, while maintaining an Overweight rating on the stock. The firm highlighted the company's fourth fiscal quarter performance, which surpassed expectations with a 4% pre-provision net revenue (PPNR) beat.
This success was attributed to a stronger net interest income (NII) and net interest margin (NIM) expansion, contrary to the stable expectations that had been forecasted. Moreover, the company effectively managed its operating expenses.
First Savings Financial Group's credit metrics remained favorable, and despite the Small Business Administration (SBA) segment continuing to be a drag on pretax income, Piper Sandler anticipates it turning profitable following strategic adjustments within the unit.
The firm reiterated its positive outlook on the stock, citing the bank's liability-sensitive balance sheet, which is expected to contribute to further profitability improvements in light of recent and anticipated Federal Reserve rate cuts.
Piper Sandler also expressed a favorable view of First Savings Financial Group's unique market position in the Louisville Metropolitan Statistical Area (MSA). The firm has adjusted its fiscal year 2025 earnings estimate to $2.65, reflecting a 20% increase, based on heightened NII expectations. Moreover, Piper Sandler has introduced a fiscal year 2026 earnings estimate of $2.75.
The new price target of $31 represents an increase of $3.50 and is based on a 1.2 times multiple, a slight increase from the previous multiple, which aligns with higher peer multiples. This valuation is consistent with peer companies, as First Savings Financial Group's more stable credit profile is considered to be offset by its sub-optimal profitability outlook.
InvestingPro Insights
Recent data from InvestingPro adds context to Piper Sandler's optimistic outlook on First Savings Financial Group (NASDAQ:FSFG). The company's P/E ratio stands at 13.52, suggesting a relatively attractive valuation compared to its earnings. This aligns with an InvestingPro Tip indicating that FSFG is trading at a low P/E ratio relative to its near-term earnings growth, supporting Piper Sandler's positive stance.
FSFG's dividend profile is particularly noteworthy. The company has raised its dividend for 10 consecutive years and maintained payments for 13 years, demonstrating a commitment to shareholder returns. With a current dividend yield of 2.23%, FSFG offers a steady income stream to investors.
The stock's recent performance has been impressive, with a 70.44% price total return over the past six months and an 86.42% return over the last year. This strong momentum is reflected in the stock trading near its 52-week high, at 98.68% of that level.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips on FSFG, providing a deeper understanding of the company's financial health and market position.
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