On Friday, financial services firm Piper Sandler adjusted its price target for Origin Bancorp (NYSE:NYSE:OBK), a financial institution, increasing it to $32.00 from the previous $30.00 while maintaining a Neutral rating. The adjustment reflects an updated earnings estimate for the years 2024 and 2025, with projections now set at $2.71 and $2.95 per share, respectively, up from the earlier estimates of $2.24 and $2.40.
The rationale behind the revised price target is tied to the less-than-anticipated number of rate cuts, which is beneficial for Origin Bancorp's asset-sensitive balance sheet. Piper Sandler's analysis suggests that this would support the bank's growth in 2025, aligning it closer to its historical 10% growth rate.
The new price target is based on approximately 11 times the firm's 2025 earnings estimate, a change from the previous 12.5 times, as analysts believe this multiple is more fitting for a bank with an expected return on assets (ROA) of 85 basis points.
Piper Sandler also acknowledged the strategic expansion of Origin Bancorp, noting the establishment of new teams in South Alabama and the Florida Panhandle. This move is seen as a positive step for the company's narrative. However, the firm anticipates that it will take some time for these new additions to significantly contribute to the company's financial performance.
In conclusion, despite the positive outlook on Origin Bancorp's growth and strategic developments, Piper Sandler has reiterated its Neutral rating. This stance is based on the view that the current share price appropriately reflects the company's value when compared to the multiples of its peers in the financial industry.
InvestingPro Insights
Origin Bancorp's commitment to enhancing shareholder value is evident through its consistent dividend increases, with InvestingPro Tips highlighting a streak of 6 consecutive years of raised dividends. Additionally, the company's forward-looking prospects are reinforced by the fact that 2 analysts have recently revised their earnings estimates upwards for the upcoming period. This aligns with Piper Sandler's updated price target and suggests a positive sentiment among market watchers.
From a valuation standpoint, Origin Bancorp's Price/Earnings (P/E) ratio stands attractively at 10.98, indicating that the stock may be undervalued compared to the broader market. The Price/Book (P/B) ratio of 0.87 further supports this, suggesting that the shares are trading below their net asset value. Meanwhile, the company's Revenue Growth over the last twelve months has been modest at 4.57%, reflecting steady, if not explosive, top-line expansion.
For investors interested in deeper analysis, InvestingPro offers additional insights and metrics, including a comprehensive fair value assessment. The current InvestingPro Fair Value is set at $29.82, which is below Piper Sandler's target but provides a conservative perspective on the stock's intrinsic value. Subscribers can access more such valuable tips and metrics to inform their investment decisions. To gain full access, use the special coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are even more InvestingPro Tips available on the site, ready to guide investors through the complexities of the financial markets.
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