On Monday, Stephens, a financial services firm, adjusted its outlook on Peoples Financial Services Corp. (NASDAQ:PFIS), reducing the price target to $47 from the previous $50 while maintaining an Equal Weight rating on the stock.
This revision follows the company's first-quarter earnings report, which revealed a miss on earnings per share (EPS) due to higher expenses. Despite this, Peoples Financial saw only a slight contraction in its net interest margin (NIM), which decreased by 1 basis point quarter-over-quarter to 2.29%.
The report from Stephens highlighted that Peoples Financial's profitability in the first quarter, as measured by return on assets (ROA), was 0.42%, lagging behind its peers. However, the firm anticipates a significant improvement following the completion of the merger of equals (MOE) with FNCB, now expected on July 1, as opposed to the previously anticipated date of April 1. The analyst projects that the ROA will exceed 1.00% by 2025.
The firm noted that Peoples Financial has maintained a conservative approach, with minimal loan growth over the past year. After the earnings announcement, Stephens revised its estimates for the company, taking into account the delayed timing of the deal with FNCB, increased expenses, and slower loan growth.
Consequently, the operating EPS forecasts for 2024 and 2025 have been lowered by 22% and 2%, resulting in revised figures of $3.16 and $5.28, respectively.
The revised price target of $47 represents approximately 120% of Peoples Financial's price to tangible book value (P/TBV). The firm concluded that while it awaits further developments, there is optimism for an earnings increase later in the year once the merger is finalized.
InvestingPro Insights
Peoples Financial Services Corp. (NASDAQ:PFIS) has shown resilience despite market challenges, as indicated by its consistent dividend history. An InvestingPro Tip highlights that the company has not only raised its dividend for 7 consecutive years but has also maintained dividend payments for 23 consecutive years. This track record of returning value to shareholders is particularly significant in the current financial climate and may be of interest to investors seeking stable income sources.
Analyzing the company's financial health, InvestingPro Data shows a market capitalization of $272.76M, with a P/E ratio that has adjusted to 10.81 over the last twelve months as of Q1 2024. The data also reveals a dividend yield of 4.24% as of the latest dividend ex-date on February 28, 2024, which may appeal to dividend-focused investors. Furthermore, analysts predict that Peoples Financial will be profitable this year, which is corroborated by their profitable performance over the last twelve months.
For those considering an investment in Peoples Financial, it's worth noting that there are additional InvestingPro Tips available that could provide deeper insights into the company's performance and potential. To explore these further, visit InvestingPro for PFIS and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 5 InvestingPro Tips listed that could guide investment decisions regarding PFIS.
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