On Thursday, Piper Sandler adjusted its price target for Bank First National Corp. (NASDAQ:BFC) to $87 from the previous $90. The firm maintained a Neutral rating on the stock. The adjustment follows Bank First's first-quarter performance, which Piper Sandler described as mixed due to a 12% pre-provision net revenue (PPNR) shortfall. This shortfall was attributed to a smaller-than-expected net interest margin (NIM) expansion and a greater increase in deposit costs.
Despite these challenges, Bank First's earnings per share (EPS) for the quarter surpassed expectations, bolstered by a tax benefit and significant share buybacks. Piper Sandler expressed confidence in the bank's NIM outlook, which is supported by robust organic growth in loans and deposits, continued good credit quality, and cost discipline. These factors are expected to keep Bank First's profitability above that of its peers.
The firm recognized Bank First as a solid long-term holding, citing its various attributes and positive prospects for future acquisitions that are anticipated to be well-received. The Neutral rating remains in place due to Bank First's current premium valuation, which stands at 1.9 times tangible book value (TBV) and 13.0 times/12.7 times Piper Sandler's estimated earnings for 2024 and 2025, respectively.
Piper Sandler has maintained its EPS estimates for Bank First at $5.90 for 2024 and $6.00 for 2025. The revised price target of $87 reflects a multiple of 14.5 times the firm's estimated 2025 earnings, a decrease of 0.5 times due to lower peer multiples. The analysis concludes with a recognition of Bank First's solid fundamentals and a forward-looking approach to its valuation.
InvestingPro Insights
Recent InvestingPro data indicates that Bank First National Corp. (BFC) is trading at a P/E ratio of 9.98, which is notably low relative to its near-term earnings growth, as evidenced by a PEG ratio of just 0.22 for the last twelve months as of Q1 2024. This could suggest that the stock is undervalued based on its growth rate. Moreover, the company has demonstrated a strong revenue growth of 41.37% over the same period, alongside an impressive operating income margin of 60.44%, reflecting efficient management and robust profitability.
Bank First has also been consistent in rewarding shareholders, maintaining dividend payments for 15 consecutive years, with a recent dividend yield of 1.84% and a significant dividend growth of 40.0%. This commitment to returning value to investors complements the positive outlook provided by analysts, who predict the company will be profitable this year, supported by a solid track record of profitability over the last twelve months.
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