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On Monday, Citi analyst Benjamin Gerlinger revised South State Corporation’s (NYSE:SSB) price target, lowering it to $113 from the previous $123, while still maintaining a Buy rating on the bank’s shares. Currently trading at $87.36, the stock has seen a -11.74% return year-to-date. The adjustment comes after South State’s shares experienced a slight underperformance last Friday, following the company’s earnings release. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with analysts setting targets ranging from $95 to $130.
Gerlinger noted the underperformance puzzled many investors but suggested that the crowded positioning and high expectations of a significant earnings beat may have capped the stock’s upside potential. Despite the recent market reaction, the analyst expressed confidence in maintaining the Buy rating but made a slight adjustment to the earnings per share (EPS) outlook. InvestingPro analysis reveals that four analysts have recently revised their earnings upwards for the upcoming period, with the company maintaining strong dividend payments for 29 consecutive years.
The first quarter of 2025 brought several changes for South State, including a securities restructure, a branch sale and lease-back deal, and smaller-than-expected balance sheet growth due to a transaction. Additionally, the bank saw negative core loan growth trends. Gerlinger believes that after accounting for these factors, the revised price target reflects a more accurate forecast.
South State’s credit profile and capital base were highlighted as stronger than anticipated, which Gerlinger sees as a key factor in the bank’s potential to outperform its peers. Despite the stretched expectations from the buy side, South State’s management team has reaffirmed its guidance. If met, this guidance is expected to yield a return on tangible common equity (ROTCE) and EPS growth that surpasses that of peer institutions.
In other recent news, South State Corp reported impressive Q1 2025 earnings, with an earnings per share (EPS) of $2.15, far exceeding the anticipated $0.88. The company’s revenue also surpassed expectations, reaching $630.64 million compared to the forecasted $611.62 million. Alongside these financial results, South State Corp successfully completed the integration of Independent Bank (NASDAQ:INDB), marking a significant step in its expansion strategy. The company reported a net interest margin of 3.85%, which was above the guided range, demonstrating effective interest rate management. Additionally, analysts from Raymond (NSE:RYMD) James and KBW discussed the company’s financial dynamics, focusing on aspects like loan accretion and net interest margin drivers. South State Corp’s financial outlook includes expectations for low to mid-single-digit loan growth and a steady net interest margin between 3.8% and 3.9%. The company is also considering potential capital deployment options later in the year. Despite these positive developments, some market uncertainties remain, including potential tariff impacts and recession risks, which the company is monitoring closely.
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