Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
On Wednesday, DA Davidson analyst Jeff Rulis adjusted the price target for Equity Bancshares (NYSE:EQBK), reducing it from $43.00 to $40.00 while retaining a Neutral rating on the stock. The stock, currently trading at $35.15, appears undervalued according to InvestingPro analysis, with a P/E ratio of 8.8x and a price-to-book ratio of 1.07x. Rulis' reassessment follows the anticipation of Equity Bancshares' successful acquisition of NBC, expected to finalize by mid-2025. The merger has led DA Davidson to revise its core earnings per share (EPS) estimates upward, from $3.65 and $4.00 to $3.80 and $4.50 for the upcoming years. The company has demonstrated strong financial health, maintaining consistent profitability with a current EPS of $4.00 and showing impressive revenue growth of nearly 60% over the last twelve months.
The analyst's revised EPS estimates closely reflect the management's accretion expectations post-merger. Despite viewing the transaction positively, Rulis noted that the recent decline in trading multiples among Equity Bancshares' peers, combined with the tangible book value (TBV) dilution caused by the deal, outweigh the benefits of the improved earnings forecast.
The new price target of $40.00 is based on 8.9 times the analyst's revised 2026 EPS estimate and 1.3 times the projected TBV as of June 30, 2025. This adjustment reflects the firm's careful consideration of the company's financial outlook post-merger, taking into account both the positive aspects of the transaction and the broader market conditions impacting Equity Bancshares' valuation.
In other recent news, Equity Bancshares has announced a significant merger agreement with NBC Corp. of Oklahoma, valued at approximately $86.9 million. This strategic acquisition will add seven branches and around $900 million in assets to Equity Bancshares' portfolio, expanding its presence in the Oklahoma City area. The merger, expected to close in the third quarter of 2025, is anticipated to be 12.5% accretive to Equity’s 2026 earnings per share, excluding one-time transaction expenses. Analysts from Keefe, Bruyette & Woods have adjusted their price target for Equity Bancshares to $44, maintaining a Market Perform rating, while DA Davidson holds a Neutral rating with a $43 target. Piper Sandler remains optimistic with an Overweight rating and a $46 price target, citing the strategic benefits of the acquisition. The merger aligns with Equity Bancshares' long-term growth strategy, marking its 25th strategic deal since 2002 and the 13th whole-bank acquisition since its IPO in 2015. The combined entity will have approximately $6.4 billion in total assets, enhancing Equity Bancshares' competitive position within the region. As the companies prepare for the merger, Equity Bancshares plans to rebrand NBC locations as Equity Bank, further integrating their operations.
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