On Tuesday, Piper Sandler adjusted its outlook for Glacier Bancorp (NYSE: NYSE:GBCI), reducing the stock price target to $38 from $39 while maintaining a Neutral rating on the stock. The adjustment comes as a response to several factors impacting the bank's financial projections.
The firm's analyst cited a need to update the earnings per share (EPS) estimates for 2024 and 2025 to $1.62 and $2.11, respectively, a slight decrease from the previous $1.67 and $2.15 estimates. This revision reflects the anticipated impact of the Day 2 Current Expected Credit Losses (CECL) from Glacier Bancorp's recent branch acquisition, which was completed on July 22.
The bank's mortgage gain on sale revenue is expected to remain relatively flat in the near term, despite an increase in the Mortgage Bankers Association's origination forecast. Additionally, the analyst anticipates a slight rise in non-interest expenses (NIE), which also contributed to the adjustment of the EPS estimates and subsequently the price target.
Piper Sandler's new price target of $38 represents a decrease of $1 and is based on an 18 times multiple of the firm's 2025 EPS estimate. Despite the reduction, the target still implies a high-quality premium relative to Glacier Bancorp's peers. This premium is justified by the bank's distinct business model, which includes a strong presence in dynamic and less competitive rural markets, a robust core deposit franchise, and a strategy that leverages small bank mergers and acquisitions to enhance EPS over time.
In other recent news, Glacier Bancorp witnessed a substantial increase in its second-quarter earnings, with net income rising by 37% to $44.7 million. The company's net interest margin also grew, reaching 2.68%. Amid these developments, Glacier Bancorp successfully completed the acquisition of six branches from Heartland Bank, a move expected to boost future net interest income growth.
Analyst firms have recently adjusted their outlooks on Glacier Bancorp. Keefe, Bruyette & Woods lowered the price target to $44, citing a shift in the company's strategy from strong growth to balance sheet restructuring.
In contrast, Truist Securities raised their price target to $46, despite a reduction in earnings per share forecasts due to anticipated net interest income decline. DA Davidson also raised their target to $49, expressing confidence in the bank's strategic initiatives and net interest income growth outlook.
These are recent developments and investors are urged to consider these facts when making decisions.
InvestingPro Insights
In the context of Piper Sandler's revised outlook for Glacier Bancorp, current InvestingPro data and tips offer additional insights for investors considering the bank's stock. With a market capitalization of $4.72 billion and a Price/Earnings (P/E) ratio of 25.16, the bank is navigating through a challenging period. The adjusted P/E ratio for the last twelve months as of Q2 2024 stands at 24.75, reflecting the bank's earnings relative to its share price.
InvestingPro data shows that Glacier Bancorp's revenue has seen a decline of over 10% in the last twelve months leading up to Q2 2024, which might be a concern for investors looking for growth. However, the bank's commitment to shareholder returns is evidenced by its track record of maintaining dividend payments for 40 consecutive years, with a dividend yield of 3.17% as of the latest data.
InvestingPro Tips highlight that while Glacier Bancorp suffers from weak gross profit margins and analysts have revised their earnings downwards for the upcoming period, the company is still expected to be profitable this year. In fact, Glacier Bancorp has been profitable over the last twelve months. Additionally, the bank's strategy of consistent dividend payments and potential profitability this year could be a draw for income-focused investors.
For those interested in a deeper analysis, InvestingPro offers additional tips on Glacier Bancorp, which can be found at https://www.investing.com/pro/GBCI. These insights could be particularly valuable given the recent adjustments in financial projections and the evolving banking environment.
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