Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Monday, Citi made adjustments to its outlook on First Citizens BancShares stock, a company listed on NASDAQ under the ticker FCNCA. The firm's analyst increased the price target to $2,350 from the previous $2,100 while maintaining a Neutral rating on the stock.
The revision comes as bank stock valuations have shifted over the last six months, influenced by election results and the prospects of an economic soft-landing. This has prompted Citi to update its cost of equity (COE) assumptions, expecting early-cycle sentiment to drive peak multiples in the near term.
First Citizens BancShares has shown strong performance year-to-date, standing out even as consensus earnings per share estimates for 2025 have decreased by 19% since the beginning of the year. Despite this robust performance, Citi's analyst suggests a cautious stance due to the limited upside potential and the stock's premium valuation compared to its regional peers.
The bank's current valuation is at a 9.7% premium based on Citi's implied cost of equity metric. This premium valuation, coupled with the stock's recent outperformance, is the rationale behind Citi's decision to maintain a neutral position on First Citizens BancShares for the time being.
In other recent news, First Citizens Bancshares reported strong third quarter results for 2024. The company announced an adjusted earnings per share of $45.87 and a resilient net interest margin of 3.53%. Despite a small increase in deposits and a decrease in loans, the bank plans to maintain a solid capital ratio and continue share buybacks.
The bank's forecast for the fourth quarter of 2024 includes flat to low single-digit loan growth, with year-end loans expected to be in the $138 billion to $140 billion range, and deposits projected between $150 billion and $153 billion.
It is also important to note that the bank is planning to submit a new capital plan in the first quarter of 2025, which may lead to additional share repurchase authorization.
These are recent developments that reflect First Citizens Bancshares' strong financial performance and strategic initiatives, despite economic challenges. The management's outlook remains optimistic as they focus on capital allocation and maintaining a robust balance sheet.
InvestingPro Insights
Recent data from InvestingPro adds depth to Citi's analysis of First Citizens BancShares (FCNCA). The company's market capitalization stands at $30.61 billion, with a P/E ratio of 12.59, reflecting its current valuation. This aligns with Citi's observation of FCNCA's premium valuation compared to regional peers.
InvestingPro Tips highlight FCNCA's strong financial performance, noting that the company has maintained dividend payments for 39 consecutive years and has shown high returns over the last year and decade. These factors support the stock's robust year-to-date performance mentioned in the article. However, it's worth noting that 9 analysts have revised their earnings downwards for the upcoming period, which could explain Citi's cautious stance despite raising the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for First Citizens BancShares, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.