On Monday, Piper Sandler adjusted its outlook on South State Corporation (NASDAQ:NYSE:SSB), a banking company, by reducing its price target from $98.00 to $95.00. Despite the downward revision, the firm maintains an Overweight rating on the stock.
The adjustment follows the first-quarter 2024 financial results and subsequent management discussion, which highlighted positive trends in loan and deposit growth, as well as net interest income (NII) over the medium to long term. However, the anticipated earnings for 2024 and 2025 were revised to $6.30 and $7.30 per share, down from the previous estimates of $6.60 and $7.55, respectively. The primary reason for the lowered earnings expectations is a reduction in the net interest margin (NIM).
Piper Sandler expressed continued confidence in South State's market position, suggesting that the company's performance and stability justify a higher price-to-earnings (P/E) ratio. The firm's target price is based on a sustained P/E multiple of approximately 13 times the earnings, which remains unchanged.
South State's stock is described as liability sensitive, with each rate cut potentially improving the NIM by 3 to 5 basis points. The firm reiterated its Overweight rating, citing a robust and resilient deposit base, favorable growth trends within an appealing franchise, and a balance sheet that is well positioned to support NII growth.
InvestingPro Insights
In light of Piper Sandler's revised outlook on South State Corporation, it's worth considering additional insights from InvestingPro. The company's commitment to shareholder returns is evident with a track record of raising its dividend for 12 consecutive years and maintaining payments for 28 years, showcasing a strong dividend history. This aligns with the positive trends in loan and deposit growth mentioned by Piper Sandler.
InvestingPro Data shows a stable market capitalization of $5.96 billion and a P/E ratio of 12.73, slightly below the adjusted P/E ratio of 12.46 for the last twelve months as of Q1 2024. The company's revenue stands at $1.61 billion, though it has experienced a slight decline in revenue growth over the last quarter. Despite concerns over weak gross profit margins, South State's operating income margin remains robust at 43.85%, indicating efficient management of operations.
For investors seeking further analysis, InvestingPro offers additional InvestingPro Tips on South State Corporation, which can be accessed at: https://www.investing.com/pro/SSB. Also, readers can use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking more in-depth financial metrics and expert insights.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.