On Thursday, Stephens, a financial services firm, increased the price target for Simmons First National (NASDAQ: SFNC) shares to $23.00, up from the previous target of $21.00. The rating on the stock remains at Equal Weight. The adjustment follows the company's second-quarter 2024 earnings per share and pre-provision net revenue, which surpassed expectations.
The positive results were attributed to an improvement in net interest income (NII) trends, as the company experienced less pressure on deposit pricing, which allowed the net interest margin (NIM) to see a slight increase.
The analyst noted that Simmons First National's balance sheet is well-positioned to benefit from lower interest rates, anticipating continued NIM advantages as earning assets keep repricing higher, despite projected lower Federal Funds rates.
Nevertheless, the revised earnings per share forecast for 2025 takes a more conservative stance on NII improvements, assuming a slower pace of balance sheet growth.
Simmons First National is also expected to see its capital levels increase, and the analyst suggested that the bank might engage in securities restructuring activities to accelerate NIM benefits. The new price target of $23.00 reflects a 15 times multiple of the forecasted 2025 earnings per share and 1.3 times the projected twelve-month tangible book value per share.
The bank's recent performance and strategic positioning indicate potential for further financial improvements, despite a cautious outlook on balance sheet expansion. The updated price target is indicative of the analyst's expectations for the bank's financial prospects over the coming year.
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