Origin Bancorp (NYSE: NYSE:OBK) has received a price target increase from DA Davidson to $41.00, up from the previous target of $38.00, while the firm maintained a Buy rating on the stock.
The adjustment follows Origin Bancorp's recent financial performance, which showed a core pre-provision net revenue (PPNR) miss attributed to weaker net interest income (NII) and operating expenses (OpEx), although this was somewhat offset by higher fee income.
The company's results were notably affected by an incident involving "questioned activity" by a banker, who has since been terminated. This incident led to a 38 basis point increase in non-performing loans (NPLs), a 5 basis point reduction in net interest margin (NIM) due to a non-accrual loan reversal, and an additional $7.3 million allocated to the loan loss provision (LLP). In response to these events, DA Davidson has revised its earnings per share (EPS) estimates upward due to a higher guide for operating expenses.
Despite these challenges, the analyst noted that the expected losses related to the "questioned activity" are anticipated to be low. Shares of Origin Bancorp were down 8% year-to-date before the earnings report and have since declined an additional 7% following the PPNR miss. However, the stock is currently trading at a tangible book value (TBV) multiple of 1.2 times, which is below the 1.6 times multiple of its KRX peers.
The firm's reiteration of the Buy rating and the increase in the price target reflect a 19% upside potential for Origin Bancorp's shares.
InvestingPro Insights
As Origin Bancorp (NYSE:OBK) navigates through recent challenges, real-time data from InvestingPro provides additional context for investors considering the stock. With a P/E Ratio (Adjusted) of 13.19 and a Price / Book value of 0.98 as of the last twelve months ending Q2 2024, the company's valuation metrics suggest a potentially attractive investment relative to earnings and book value. Additionally, the company has demonstrated revenue growth, with a 5.2% increase in the most recent quarter of 2024.
InvestingPro Tips highlight the company's ability to raise its dividend for 6 consecutive years, indicating a commitment to returning value to shareholders. Moreover, analysts predict profitability for the current year, reinforcing the positive outlook despite weaker gross profit margins. These factors, combined with a strong return over the last three months, with a 16.69% price total return, may entice those looking for growth and income potential.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/OBK. And for those interested in a subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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