On Friday, Piper Sandler adjusted its outlook on Heritage Commerce Corp (NASDAQ:HTBK) shares, reducing the price target to $10 from $11, while keeping an Overweight rating on the stock.
The adjustment follows Heritage Commerce's first-quarter earnings report, which showed earnings per share (EPS) of $0.17, missing the firm's expectations by $0.02 and the consensus estimate by $0.01.
The lower-than-anticipated net interest income (NII), which declined by 5%, contributed to the earnings miss. The net interest margin (NIM) decreased by 7 basis points to 3.34%, falling short of Piper Sandler's projection of 3.38%.
Additionally, a reduction in the size of the earning asset base also played a role in the weaker financial results. Expenses exceeded expectations by $0.01 per share, influenced by seasonally higher compensation costs.
In response to the first-quarter performance, Piper Sandler has revised its models to account for narrower margins and increased expenses, though these are partially balanced by lower provision estimates. Consequently, the firm has lowered its EPS forecasts for Heritage Commerce for the years 2024 and 2025 by $0.07 and $0.05, respectively, to $0.78 and $0.85.
The new price target of $10 is based on 12.8 times Piper Sandler's 2024 EPS estimate for Heritage Commerce. This revision reflects the firm's latest analysis and expectations for the company's financial trajectory in the coming years.
InvestingPro Insights
Following Piper Sandler's recent price target adjustment on Heritage Commerce Corp (NASDAQ:HTBK), it's important to consider additional metrics and insights that could impact investor decisions. According to real-time data from InvestingPro, Heritage Commerce Corp has a market capitalization of $478.96 million and an attractive P/E ratio of 8.99, reflecting investor sentiment on its earnings potential. Despite a recent decline in revenue growth, down 9.27% in the last twelve months as of Q1 2024, the company maintains a significant dividend yield of 6.36%, highlighting its commitment to returning value to shareholders.
Heritage Commerce Corp has been able to maintain dividend payments for 12 consecutive years, an InvestingPro Tip that suggests a stable financial position and a focus on shareholder returns. However, analysts have noted weak gross profit margins and anticipate a drop in net income this year. Nonetheless, the company is expected to remain profitable, with the last twelve months as of Q1 2024 showing profitability, which is a key consideration for investors looking for stable earnings. For those interested in further analysis, there are additional InvestingPro Tips available that delve deeper into Heritage Commerce's financial health and future prospects.
For investors seeking comprehensive insights, InvestingPro offers more detailed tips and metrics. Use coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription. As of now, there are 6 more InvestingPro Tips available for Heritage Commerce Corp, which can be accessed at https://www.investing.com/pro/HTBK, providing a broader understanding of the company's financial performance and outlook.
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