Citi raises Popular stock price target to $130, maintains Buy rating

On Friday, Citi analysts adjusted their outlook on Popular, Inc. (NASDAQ:BPOP), raising the price target from $108.00 to $130.00, while reiterating a Buy rating on the company’s shares. The revised price target reflects a positive view on the bank’s future performance amidst the current economic landscape. Currently trading at $103.49, near its 52-week high of $106.46, InvestingPro analysis suggests the stock is slightly undervalued based on its proprietary Fair Value model.

Citi’s analysis highlighted Popular, Inc.’s advantageous position due to its short-duration securities book in an environment where interest rates are expected to remain high for an extended period. The analysts anticipate that if loan growth trends persist, there could be a shift from average earning assets (AEA) into loans, bolstering the bank’s profitability towards a 12% return on tangible common equity (ROTCE) by the fourth quarter of 2025. With a current P/E ratio of 12.12 and strong dividend history, including six consecutive years of dividend increases, the bank shows promising fundamentals. InvestingPro subscribers can access 8 additional key insights about BPOP’s financial health and growth prospects.

Despite the expense guidance being slightly higher than anticipated, Citi expects the growth rate to slow down in the upcoming years. The firm commended Popular’s accelerated share repurchase program and predicts it will continue moving forward.

Investors have shown some concern regarding recent credit trends at Popular, Inc., but Citi analysts believe that these trends will stabilize in the near future, following a reevaluation of underwriting practices. The increase in the price target to $130 is justified by an improved earnings per share (EPS) outlook and the quickened pace of share repurchases, according to the firm’s statement.

In other recent news, Popular, Inc. has seen a positive adjustment in its stock price target by both RBC Capital Markets and Keefe, Bruyette & Woods (KBW) following a strong quarterly performance. RBC Capital raised the price target to $110 from the previous $100, maintaining an Outperform rating, while KBW analyst Kelly Motta increased the price target to $129 from $116, with a maintained Market Perform rating. Both firms highlighted Popular’s solid financial foundation and consistent dividend growth.

Recent developments indicate Popular’s robust capital situation, with a 16.0% common equity tier 1 ratio and a "GOOD" overall financial health score from InvestingPro. RBC Capital’s analysis also emphasized the positive impact of U.S. Government disaster relief spending and overall U.S. economic growth on the Puerto Rican economy. Furthermore, Popular’s guidance indicates a stable pre-provision net revenue outlook, with an expected rise in net interest income offsetting lower fee revenues.

KBW’s Motta projects that Popular’s earnings per share will more than double that of its peers over the next two years. The firm’s financial strategy includes continuing its stock buyback program and increasing its dividend, actions that typically signal confidence in a company’s financial health and outlook. With a bullish outlook through 2025, Popular, Inc. is expected to meet its end-of-year 2025 return on tangible common equity target of 12%.

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