S&P 500 falls on pressure from retail stocks, weak jobless claims
On Tuesday, Citi analysts adjusted their stance on Bank OZK (NASDAQ:OZK), increasing the price target to $40.00, up from the previous $38.00, while still maintaining a Sell rating on the stock.
The revision follows Bank OZK's fourth-quarter 2024 net interest margin (NIM) results, which surpassed expectations. The analysts noted that the bank's short position setup likely contributed significantly to the stock's rise last Friday.
Bank OZK's pre-provision net revenue (PPNR) was better than anticipated, which has been a key factor in the recent narrative around the stock's performance. Post-results, the analysts believe that the stock's positioning is much more balanced. Nonetheless, concerns were raised regarding the continuous nonperforming loan (NCO) trend related to the Chicago Land Loan and higher loan loss provision expenses (excluding unfunded commitments), which could indicate potential challenges over the next 12 to 24 months.
In the context of a persistent high-interest rate environment, Citi analysts expect Bank OZK to generate increased revenue due to its asset sensitivity. However, they caution that the same environment could lead to greater interest pain for the bank's sponsors. The price target hike reflects these mixed factors, with an additional $2 added to the previous target.
"We increased our TP to $40 (+$2), but expect the current set-up to have outsized risk relative to reward with ramping loan modifications and a very lackluster Life Science and Office CRE environment," the analysts said.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.