DA Davidson cuts Hope Bancorp target to $14.50, keeps Buy rating

On Tuesday, DA Davidson revised its price target for Hope Bancorp (NASDAQ:HOPE) shares, reducing it to $14.50 from the previous $15.50, while continuing to endorse the stock with a Buy rating. Currently trading at $11.93, with a market capitalization of $1.44 billion, the stock appears fairly valued according to InvestingPro analysis. The adjustment comes after the company reported its financial results, which exceeded DA Davidson’s estimates. The outperformance was attributed to the earlier than expected completion of the Territorial Bancorp Inc. (NASDAQ:TBNK) acquisition.

Analyst Gary Tenner at DA Davidson acknowledged that the results surpassed their projections due to the timing of the TBNK acquisition. The firm had initially accounted for a higher provision in their fourth-quarter model in anticipation of the acquisition. However, Hope Bancorp’s guidance for 2025, which now includes the TBNK transaction, forecasts a lower level of net interest income (NII) than DA Davidson had predicted, leading to a reduced earnings per share (EPS) outlook. InvestingPro data reveals that five analysts have recently revised their earnings estimates downward, with revenue showing a significant decline of 13.8% in the last twelve months.

Despite the lower EPS forecast, Tenner highlighted the stock’s potential, noting that shares are trading below tangible book value (TBV), with InvestingPro confirming a price-to-book ratio of 0.66. He also pointed out the positive EPS trajectory expected for 2025 as a basis for maintaining the Buy rating on the stock. The new price target of $14.50 reflects these considerations and the updated analysis following the recent acquisition and financial guidance provided by Hope Bancorp. Notably, the company has maintained dividend payments for 13 consecutive years, currently offering an attractive 4.57% yield.

In other recent news, Hope Bancorp has been in the spotlight due to several key developments. The company announced stable Q3 earnings, with a net income of $24.2 million, or $0.20 per diluted share, and adjusted earnings of $25.2 million, or $0.21 per share. Alongside this, the company reported an 11% annualized growth in customer deposits and a 2% increase in loans receivable.

Furthermore, Hope Bancorp and Territorial Bancorp have received approval from their respective shareholders for a merger. This strategic consolidation within the banking industry is still subject to regulatory approvals and customary closing conditions. The merger is expected to create a larger, diversified banking institution, enhancing both companies’ market presence and growth opportunities.

However, Keefe, Bruyette & Woods (KBW) has lowered its price target for Hope Bancorp to $14 from the previous $15.50, citing net interest income (NII) headwinds that could pressure the stock’s earnings per share (EPS) estimates. Despite these challenges, KBW maintains a Market Perform rating for the company.

These recent developments highlight Hope Bancorp’s active engagement in strategic growth initiatives and its ongoing efforts to navigate the current economic climate. As these events unfold, investors are encouraged to stay informed about the company’s performance and future prospects.

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