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On Wednesday, DA Davidson analysts adjusted their outlook on Cadence Bancorp (NYSE:CADE), reducing the price target from $42.00 to $37.00 while reaffirming a Buy rating on the company’s shares. With the stock trading at $28.99 and a P/E ratio of 10.06x, InvestingPro analysis suggests the shares are currently fairly valued. The revision follows Cadence Bancorp’s first-quarter performance, which surpassed expectations due to a lower provision and non-interest expense (NIE) run rate than anticipated.
Cadence Bancorp’s loan growth in the first quarter was robust, and this trend is expected to carry on, with unchanged guidance and a strong pipeline as the company moves into the second quarter. The bank has demonstrated impressive revenue growth of 49.07% over the last twelve months, with total revenue reaching $1.72 billion. Analysts at DA Davidson project a positive net interest income (NII) trajectory and a stable net interest margin (NIM) for the remainder of the year.
Despite the price target adjustment, the analysts noted that Cadence Bancorp’s valuation remains lower than historical levels. The bank is prioritizing the use of its capital for organic growth and opportunistic mergers and acquisitions (M&A), rather than repurchasing its shares. This strategy suggests that Cadence Bancorp is focusing on long-term growth opportunities.
The analyst’s comments highlighted the company’s strategic approach, stating, "CADE’s first quarter beat expectations on the strength of a lower provision and NIE run rate than projected. Solid first quarter loan growth appears likely to continue, with guidance unchanged, and a strong pipeline heading into the second quarter. A positive NII trajectory, and stable NIM is projected for the remainder of the year. Despite a lower than historical valuation, CADE continues to focus capital usage for organic growth and opportunistic M&A, rather than a buyback."
Investors and stakeholders of Cadence Bancorp will be watching closely to see how the bank’s strategic focus on growth and M&A activities will influence its performance in the upcoming quarters.
In other recent news, Cadence Bancorp reported first-quarter earnings that surpassed expectations, with earnings per share (EPS) of $0.71, exceeding the forecast of $0.64. However, the company’s revenue slightly missed projections, coming in at $448.6 million against a forecast of $451.3 million. The bank also completed the acquisition of First Chatham Bank, expanding its presence in Georgia. Loan growth was noted in key markets, including Texas, Florida, and Georgia, with a net income of $130.9 million and a return on assets of 1.15%. In analyst updates, Keefe, Bruyette & Woods lowered Cadence Bancorp’s price target to $38.00 from $42.00 but maintained an Outperform rating, highlighting the bank’s robust revenue growth potential despite a flatter net interest margin outlook. The firm noted that Cadence Bancorp’s pre-provision net revenue exceeded expectations, and its organic growth trajectory could set it apart from its peers. Strategic opportunities such as mergers and acquisitions or share buybacks were also mentioned as potential value additions.
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