On Monday, Amerant Bancorp Inc (NYSE:AMTB) stock received an upgrade from Piper Sandler from Neutral to Overweight. The firm also adjusted the price target on the stock to $26.50 from $26.00.
This decision followed the completion of a significant capital raise by the financial institution last Thursday, where Amerant Bancorp priced a $165 million gross capital raise at $19 per share, resulting in the issuance of approximately 8.7 million new shares. This offering expanded the company's share count by around 25%.
The upgrade reflects Piper Sandler's positive outlook on Amerant Bancorp's potential for growth, especially after the bank successfully increased its capital.
The new capital levels, with a common equity tier 1 (CET1) ratio of approximately 11.6%, position Amerant Bancorp to pursue rapid expansion within its core Florida markets. According to Piper Sandler, the bank has now transitioned from a phase of transformation into a stage focused on execution.
Piper Sandler anticipates that Amerant Bancorp will progress towards its goal of a 1% return on assets (ROA) by 2025. The firm has modeled expected earnings per share (EPS) for Amerant Bancorp at $2.10 and $2.60 for the years 2025 and 2026, respectively. This forecast is based on the assumption that the bank will benefit from stronger net interest margin (NIM) trends in the future.
Despite expectations of a complex third-quarter earnings report, which may show a significant reported loss, Piper Sandler suggests that the most challenging credit issues are likely resolved. The analyst predicts that Amerant Bancorp's financial optics will start to improve in the fourth quarter of 2024 and continue to get better thereafter.
In other recent news, Amerant Bancorp Inc. has made several significant moves. The company has raised $150 million through the sale of common stock at $19.00 per share, a strategy aimed to support further loan growth and restructure approximately 37% of its bond portfolio. Keefe, Bruyette & Woods maintained a Market Perform rating on Amerant Bancorp, keeping the price target steady at $24.00.
In a bid to streamline its operations, Amerant Bancorp has received regulatory approval for the sale of its Houston operations to MidFirst Bank. This transaction, which includes six Amerant Bank branches, is expected to finalize in November.
Amerant Bancorp also reported an increase in net interest income and a 34% rise in non-interest income in the second quarter of 2024, despite a slight decrease in total deposits and an increase in non-performing loans. These developments are part of Amerant Bancorp's strategic efforts to bolster its financial position and enhance shareholder value. These are some of the recent developments in Amerant Bancorp.
InvestingPro Insights
To complement Piper Sandler's optimistic outlook on Amerant Bancorp Inc (NYSE:AMTB), recent data from InvestingPro provides additional context for investors. As of the last twelve months ending Q2 2024, AMTB reported a revenue of $327.31 million, with a notable revenue growth of 8.52%. This growth trend aligns with Piper Sandler's expectations for the bank's expansion potential.
InvestingPro Tips highlight that Amerant Bancorp has been profitable over the last twelve months, supporting the analyst's view on the bank's improving financial position. Additionally, analysts predict the company will remain profitable this year, which corroborates Piper Sandler's positive EPS forecasts for 2025 and 2026.
However, investors should note that AMTB is currently trading at a high earnings multiple, with a P/E ratio of 33.39. This valuation metric suggests that the market has already priced in some of the growth expectations discussed in the analyst upgrade.
For those seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for AMTB, providing a deeper dive into the company's financial health and market position.
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