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Monday, Stephens analysts adjusted their outlook on Bank OZK (NASDAQ:OZK), reducing the price target to $54 from the previous $59, while maintaining an Equal Weight rating on the stock. The revision follows Bank OZK’s first quarter of 2025 results, which showcased a revenue and pre-provision net revenue (PPNR) beat, attributed to an increase in fees and net interest income (NII). The $4.73 billion bank currently trades at a modest P/E ratio of 6.8x, with analyst targets ranging from $40 to $64. InvestingPro analysis indicates the stock is currently slightly undervalued based on its Fair Value model.
The analysts noted that despite the PPNR outperformance, Bank OZK’s guidance for the year 2025 remained largely unchanged. This was interpreted as caution due to the conservative consensus forecast and the current macroeconomic uncertainty. The credit trends at Bank OZK indicated a moderate normalization, with some migration in the Real Estate Specialized Group (RESG) loans, which seemed to align with investor expectations. The bank has demonstrated strong financial health, earning a GREAT rating from InvestingPro’s comprehensive scoring system, with particularly robust scores in profitability and relative value metrics.
Bank OZK’s recent disclosures revealed that 93% of RESG loans had been appraised in the last two years, leading to a weighted average loan-to-value (LTV) of just 45%. According to the analysts, these figures should bolster investor confidence in the bank’s credit outlook. Stephens’ updated forecast includes a modest positive revision of both earnings per share (EPS) and PPNR.
The revised price target of $54 is based on 8 times the firm’s 2026 EPS forecast of $6.69 and 1.1 times the 12-month forecast of tangible book value per share (TBVPS). The analysts’ assessment reflects a mix of caution due to the lack of visibility from macroeconomic factors and a recognition of the bank’s solid fundamentals.
In other recent news, Bank OZK reported a strong performance for Q1 2025, with earnings per share (EPS) of $1.47, surpassing the forecasted $1.41. The company’s revenue reached $409.23 million, exceeding the expected $403.2 million. These results indicate a continuation of the bank’s positive financial trajectory. Furthermore, Bank OZK announced plans to open 34 new branches in 2025 and launched a new natural resources group, signaling strategic growth initiatives. Despite economic uncertainties, the bank maintained a positive outlook on growth, emphasizing its strategy to diversify beyond traditional real estate lending. Analysts from firms like Piper Sandler and Janney highlighted the bank’s robust loan growth and diversification efforts. Bank OZK also reiterated its guidance for mid-single to high single-digit loan growth for the year. The bank’s focus on expanding its Corporate and Institutional Banking division is expected to support future growth amid elevated loan repayments.
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