On Wednesday, Keefe, Bruyette & Woods adjusted its price target on shares of Hope Bancorp, traded on NASDAQ:HOPE, to $12.00, a decrease from the previous target of $13.00. The firm maintained its Market Perform rating on the bank's stock.
The revision of the price target was influenced by Hope Bancorp's proposed acquisition of TBNK, which is expected to bring in lower-cost and more granular deposits. These deposits are particularly valuable in the current economic environment where higher interest rates are anticipated to persist for an extended period.
Despite the benefits of the TBNK deal, Keefe, Bruyette & Woods anticipates that Hope Bancorp's earnings per share (EPS) might face downward pressure when considered on a stand-alone basis. The firm also noted that Hope Bancorp's stock continues to trade at a relatively low valuation, with a pro forma tangible book value (TBV) per share multiple of 0.7x based on first quarter 2025 estimates.
The firm's outlook for Hope Bancorp remains cautious due to the expectation that the bank's returns will likely stay subdued until there is a significant decrease in interest rates. Keefe, Bruyette & Woods projects a 10% exit return on tangible common equity (ROTCE) for Hope Bancorp in the year 2025.
InvestingPro Insights
With the recent adjustment of Hope Bancorp's price target by Keefe, Bruyette & Woods, investors may find additional context through real-time data and insights from InvestingPro. Hope Bancorp's market capitalization stands at $1.21 billion, and the stock is currently trading at a price-to-earnings (P/E) ratio of 9.98, which slightly adjusts to 9.3 when looking at the last twelve months as of Q1 2024. Despite a recent downturn in the stock price over the last week, the valuation implies a strong free cash flow yield, which could be an attractive point for investors seeking value.
InvestingPro Tips suggest that while analysts have revised their earnings downwards for the upcoming period, there's a silver lining as the company has maintained dividend payments for 13 consecutive years, with a dividend yield of 5.59% as of the latest data. Additionally, analysts predict Hope Bancorp will be profitable this year, having been profitable over the last twelve months.
For those looking to delve deeper into Hope Bancorp's financials and future prospects, InvestingPro offers further insights. There are additional InvestingPro Tips available for Hope Bancorp, which can be found at https://www.investing.com/pro/HOPE. Interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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