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Investing.com - Raymond (NSE:RYMD) James initiated coverage on Cass Information Systems, Inc. (NASDAQ:CASS) with an Outperform rating and a $50.00 price target on Monday. According to InvestingPro analysis, the stock is currently undervalued, trading at $44.18 with a P/E ratio of 28.75.
The financial services company operates two divisions: a community bank representing 46% of first-quarter 2025 assets and a payments division accounting for 54% that processes more than $90 billion in annual payment volume across transportation and utilities sectors. With a market capitalization of $589 million and revenue growth of 4.54% in the last twelve months, Cass maintains strong financial health with minimal debt, as evidenced by its debt-to-equity ratio of just 0.02.
Raymond James highlighted that Cass is positioned to benefit from a widening net interest margin due to the repricing of fixed-rate assets. The company deployed excess liquidity into fixed-rate loans during the zero-rate environment following the COVID pandemic, with 75% of its loans being fixed-rate.
The firm noted that Cass continues to embrace automation to improve efficiency in its labor-intensive payments business, which should enhance profitability through positive operating leverage in future years.
While acknowledging challenges in the freight market, Raymond James pointed out that Cass operates in the less volatile contract shipping market and has increasingly differentiated its payments division with its utilities offering, where it has gained market share over the past several years. InvestingPro data reveals the company has raised its dividend for 23 consecutive years, demonstrating consistent shareholder returns. Unlock more exclusive insights and 12+ additional ProTips with an InvestingPro subscription.
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