DA Davidson cuts First Citizens stock target to $2,050

On Thursday, DA Davidson adjusted its outlook on First Citizens BancShares (NASDAQ:FCNCA), reducing the price target from $2,100.00 to $2,050.00 while maintaining a Neutral stock rating. The firm’s analysts cited a combination of factors influencing their revised expectations, including a weaker net interest income (NII) forecast due to anticipated net interest margin (NIM) compression, which they expect to counterbalance the strong loan and deposit growth projections for the bank. According to InvestingPro data, the bank currently trades at a P/E ratio of 11.07 and shows signs of being slightly undervalued based on its Fair Value analysis.

Kevin Fitzsimmons, an analyst at DA Davidson, highlighted that First Citizens could experience balance sheet and fee growth above that of its peers if there’s an increase in capital markets activity. Additionally, the bank could see benefits from the current high-interest-rate environment due to its asset sensitivity. Despite these potential positives, the lowered earnings per share (EPS) outlook reflects the challenges posed by the expected NIM compression.

First Citizens’ stock performance was also noted, with shares having declined by 1% compared to the KRX index since the last earnings report. This is part of a broader trend that saw the stock down 6% year-to-date, although it had gained 39% in the previous year, 2024. InvestingPro data reveals the bank maintains a solid market capitalization of $24.14 billion and generates annual revenue of $9.09 billion. For deeper insights into First Citizens’ financial health and additional ProTips, subscribers can access the comprehensive Pro Research Report available on InvestingPro.

The investment firm also made slight adjustments to its expectations for First Citizens’ share buyback program. Updates indicate that the bank is on track to reach its Common Equity Tier 1 (CET1) capital ratio target of 10.5%-11% by the first quarter of 2026, a slight delay from the previously anticipated end of 2025. InvestingPro analysis highlights that management has been aggressively buying back shares, demonstrating confidence in the company’s future prospects despite 9 analysts revising their earnings expectations downward for the upcoming period.

DA Davidson’s reiteration of a Neutral rating reflects caution amid potential rate cuts and macroeconomic uncertainties that could limit the stock’s upside potential.

In other recent news, First Citizens BancShares reported its financial results for the first quarter of 2025, with adjusted earnings per share (EPS) of $37.79, slightly below the forecast of $38.3. However, the company achieved a revenue of $2.3 billion, exceeding the expected $2.19 billion. The bank demonstrated strong performance in tech, media, telecom, and healthcare sectors, contributing to robust revenue growth. On the analyst front, Jefferies initiated coverage of First Citizens with a Hold rating and a price target of $2,050, noting the bank’s effective capital return strategy and solid growth trends in loans and deposits. Jefferies also highlighted potential benefits from the Silicon Valley Bank segment, contingent on a resurgence in the innovation economy, but expressed concerns about the bank’s asset sensitivity in a rate-cutting environment. Additionally, First Citizens terminated its FDIC loss share agreement and completed significant share repurchases, returning substantial capital to shareholders. The bank’s management has set loan and deposit guidance for the upcoming quarters, reflecting cautious optimism amid market uncertainties. These developments provide investors with a comprehensive view of the bank’s recent activities and strategic directions.

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