Keefe, Bruyette & Woods has maintained a positive outlook on HBT Financial (NASDAQ: NASDAQ:HBT), reaffirming its Outperform rating and a $25.00 price target for the bank holding company's stock.
The endorsement follows HBT Financial's recent earnings report, which revealed operating earnings of $0.61 per share, surpassing the analyst's expectations by $0.04 per share.
The better-than-expected results were attributed to a robust pre-provision net revenue (PPNR) and a reduced provision for credit losses.
The financial institution's net interest margin (NIM) also outperformed projections by six basis points, contributing to a stronger net interest income (NII). This was slightly balanced out by a mix of a one-cent increase in fee income and a one-cent shortfall in expenses.
HBT Financial's credit quality remained solid, with a 2% decrease in nonperforming assets (NPAs) and stable net charge-offs (NCOs). However, loan growth showed weakness, declining by 2% on a linked quarter annualized (LQA) basis, leading to a lower provision for credit losses.
Despite recent interest rate cuts in the third quarter and the anticipation of further cuts in the fourth quarter, the analyst expects HBT Financial's margin to encounter only modest headwinds. The forecast suggests that the margin should begin to stabilize in the second half of 2025.
Adjustments to the firm's financial model, accounting for a slightly lower net interest income, have led to a trimmed earnings estimate for 2025 and 2026. Nonetheless, the firm maintains its $25 price target and Outperform rating on HBT Financial's shares.
The analyst's commentary indicates that while HBT Financial may face some challenges due to the interest rate environment, the bank's fundamental performance metrics, particularly its strong PPNR and credit trends, provide a basis for the positive rating and price target.
In other recent news, HBT Financial has been the subject of several significant developments. The company's third-quarter results showcased stronger revenue, driven by an unexpected expansion in Net Interest Margin (NIM) and an increase in core fee income.
Piper Sandler, having noted the solid credit quality of HBT Financial, adjusted its price target for the company's stock, while maintaining a Neutral rating. The firm also increased its fourth-quarter 2024 earnings estimate for HBT Financial, citing higher core fee income expectations.
HBT Financial has also announced a quarterly cash dividend of $0.19 per share, continuing its practice of providing returns to shareholders. In addition, DA Davidson adjusted its outlook on HBT Financial, increasing the price target following the company's robust second-quarter performance and highlighting the company's interest in strategic mergers and acquisitions.
Keefe, Bruyette & Woods also adjusted their outlook on HBT Financial, increasing the price target and reaffirming an Outperform rating on the company's shares, following a recent earnings report that revealed a performance slightly above market expectations.
InvestingPro Insights
Recent data from InvestingPro offers additional context to HBT Financial's performance and valuation. The company's P/E ratio of 10.36 and adjusted P/E ratio of 9.11 for the last twelve months as of Q3 2024 suggest that the stock may be undervalued relative to its earnings. This aligns with one of the InvestingPro Tips, which indicates that HBT is trading at a low P/E ratio relative to its near-term earnings growth.
Despite the analyst's positive outlook, it's worth noting that HBT's revenue growth has been negative, with a -1.25% decline over the last twelve months and a -2.54% decrease in the most recent quarter. This data point supports the article's mention of weak loan growth and could explain the analyst's trimmed earnings estimates for future years.
On a positive note, HBT Financial boasts a strong operating income margin of 48.47% for the last twelve months, which corroborates the article's highlight of robust pre-provision net revenue. Additionally, the company offers a dividend yield of 3.54%, with a notable dividend growth of 11.76% over the last twelve months, potentially making it attractive to income-focused investors.
InvestingPro Tips also reveal that while HBT is expected to remain profitable this year, three analysts have revised their earnings downwards for the upcoming period. This information adds nuance to the earnings beat mentioned in the article and may warrant closer attention from investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 5 additional tips for HBT Financial, providing a deeper dive into the company's financial health and market position.
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