On Tuesday, Piper Sandler, a financial services firm, increased the price target for South Plains Financial Inc . (NASDAQ: NASDAQ:SPFI) to $36.00, up from the previous target of $32.00. The firm maintains an Overweight rating on the stock.
The adjustment to the price target follows revised earnings estimates for the years 2024 and 2025. The new estimates for earnings per share (EPS) are now set at $2.48 for 2024, an increase from the previous $2.34, and $2.56 for 2025, which remains unchanged. The upward revision for 2024 primarily reflects higher anticipated results for the second quarter of that year.
Piper Sandler's positive stance on South Plains Financial is attributed to several factors that position the bank for a strong performance in the current year. These include a liability-sensitive position, a flexible balance sheet, and excess capital. The firm also notes that share repurchases may become less advantageous, which could further grow the bank's capital.
The bank is expected to leverage its strengths to capitalize on growth opportunities, especially as competitors may be pulling back. Piper Sandler projects a return on assets (ROA) of approximately 1% for South Plains Financial in 2025.
The new price target of $36.00 is based on approximately 1.2 times the projected tangible book value per share (TBVPS) for the upcoming year. This valuation approach marks a shift from the price-to-earnings (P/E) multiple previously used, reflecting the bank's evolution into a more profitable franchise.
In other recent news, South Plains Financial reported a rise in its second quarter diluted earnings per share (EPS) to $0.66, up from $0.64 in the preceding quarter. This increase was attributed to strong organic loan growth and an improved net interest margin (NIM). Additionally, the company announced a quarterly dividend of $0.14 per share.
Executives from South Plains Financial and Citibank discussed the recent shift in investor interest from tech stocks to financials. They also emphasized their cautious approach to capital management and growth, considering upcoming election and geopolitical uncertainties. These developments are part of the recent news surrounding South Plains Financial.
InvestingPro Insights
Piper Sandler's revised price target for South Plains Financial Inc. (NASDAQ: SPFI) aligns with a broader financial assessment that considers the bank's growth trajectory and profitability. In light of this, InvestingPro data reveals that SPFI has a market capitalization of $529.02 million and a P/E ratio of 11.69, which underscores the bank's solid earnings relative to its share price. Additionally, the bank's price-to-book ratio stands at 1.27, suggesting that the market values the company at a slight premium over its book value.
InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, supporting Piper Sandler's optimistic outlook. Moreover, SPFI has shown a strong price performance, with a notable 23.55% return over the last month and a 29.96% return over the past year, indicating robust investor confidence.
It's worth noting that the bank has raised its dividend for 5 consecutive years, which may appeal to income-focused investors. Furthermore, the bank's dividend yield is currently at 1.74%, coupled with a dividend growth of 7.69% in the last twelve months, reflecting a commitment to returning value to shareholders.
For a deeper analysis and additional insights on South Plains Financial, including more InvestingPro Tips, visit https://www.investing.com/pro/SPFI. And remember, using the coupon code PRONEWS24 can get you up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to an array of valuable financial data and investment tools.
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