Monday, Truist Securities adjusted its price target for South State Corporation (NYSE:SSB) shares to $103 from the previous $111 while retaining a Hold rating on the stock. The adjustment follows the company's third-quarter financial results, which prompted the firm to revise its Core EPS estimates for 2024, 2025, and 2026 upwards by 4%, 6%, and 2% respectively, to $7.07, $7.38, and $9.42.
The analyst at Truist Securities highlighted that the revised estimates take into account an increase in fees, a decrease in provisioning for credit losses, and reduced expenses. Net Interest Income (NII) is expected to continue benefiting from the repricing of fixed-rate loans and lower deposit costs, given the company's balance sheet's slight liability sensitivity.
The report also noted that fee income forecasts have become more optimistic following strong quarterly results from correspondent lending. This positive outlook is somewhat tempered by expectations of weaker NII in the near term. Despite the reduction in the price target, Truist Securities believes that the stock is approaching a fair valuation, trading at approximately 12.8 times the firm's projected 2025 earnings per share (EPS).
In conclusion, the firm's new price target of $103 reflects a valuation of 14.0 times the estimated 2025 earnings per share, down from the earlier target of $111. This new target is set amidst the backdrop of South State Corporation's recent financial performance and the analyst's forward-looking expectations for the company's earnings trajectory.
In other recent news, South State Corporation has been the subject of significant developments. The company reported strong financial performance in its Q3 2024 Earnings Call, revealing growth in loans, deposits, revenue, and earnings per share. Additionally, the company expects mid-single-digit growth and an improving yield curve for 2025.
Piper Sandler, after reviewing these results, raised its price target for South State from $110 to $112 and maintained an Overweight rating. The firm increased its earnings estimates for South State for 2024 to 2026, citing effective expense management and the potential for further loan loss reserve releases.
Another key development is South State's ongoing merger with Independent Financial, scheduled for completion by summer 2025. The merger is expected to improve the liability sensitivity of South State's balance sheet.
InvestingPro Insights
South State Corporation's recent financial performance and future outlook align with several key metrics and insights from InvestingPro. The company's P/E ratio of 14.72 is consistent with Truist Securities' valuation of 14.0 times estimated 2025 earnings. This suggests that the market's current valuation is in line with analyst expectations.
InvestingPro data shows that South State Corporation has a revenue growth of 2.63% over the last twelve months, with a more impressive quarterly revenue growth of 10.39% in Q3 2024. This growth trend supports Truist Securities' upward revision of EPS estimates for the coming years.
Two relevant InvestingPro Tips highlight the company's financial stability and growth potential. First, South State Corporation "has raised its dividend for 13 consecutive years," indicating a strong commitment to shareholder returns. Second, "analysts predict the company will be profitable this year," which aligns with Truist Securities' positive EPS projections.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into South State Corporation's financial health and market position.
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