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On Monday, DA Davidson adjusted its outlook on Texas Capital Bancshares (NASDAQ:TCBI) stock, lowering the price target to $76 from the previous $81 while maintaining a Neutral rating. The firm’s analyst pointed to a quarter with mixed results, where substantial growth in net interest income (NII) was overshadowed by a decline in capital markets fees. According to InvestingPro data, the stock currently trades at a P/E ratio of 36.8x, suggesting a relatively high earnings multiple compared to peers. The stock has declined about 16% year-to-date, currently trading near $65.
Texas Capital Bancshares recently updated its total revenue forecast to the higher end of the previously estimated range, anticipating high single to low double-digit revenue growth. This update comes despite the current uncertainties in the market. Management at Texas Capital Bancshares has expressed confidence in a robust recovery in capital markets activity in the second half of 2025, noting that merger and acquisition pipelines are currently twice as large as they were the previous year. InvestingPro analysis indicates the company maintains healthy financials with a debt-to-equity ratio of 0.45 and positive free cash flow yield of 11%.
However, DA Davidson expressed concerns regarding the ongoing uncertainties that might continue for an extended period. The analyst underscored the potential challenges in achieving the projected total revenue growth of 9.5%. The firm’s stance reflects caution amid the optimism shown by Texas Capital Bancshares management regarding future revenue prospects. InvestingPro subscribers can access 8 additional key insights about Texas Capital Bancshares, including detailed Fair Value analysis and comprehensive financial health scores, helping investors make more informed decisions.
The report from DA Davidson highlights the complexities facing the banking sector, with fluctuating capital markets fees and the broader economic uncertainty impacting financial institutions. Texas Capital Bancshares’ stock price adjustment and revenue projections will be closely watched by investors as the company navigates through the second half of the year, with analyst targets ranging from $70 to $90 per share.
In other recent news, Texas Capital Bancshares reported its first-quarter 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.92, falling short of the projected $0.9518, while revenue reached $280.48 million, missing the anticipated $285.71 million. Despite these shortfalls, Texas Capital demonstrated robust year-over-year growth, with total revenue increasing by 9% and net income to common shareholders rising by 44%. The company’s focus on expanding its treasury solutions and launching a new wealth management platform contributed to these gains. Stephens analyst Matt Olney adjusted the price target for Texas Capital shares to $90 from $95 but maintained an Overweight rating, citing the company’s strong net interest income and solid capital position. Texas Capital has also revised its revenue guidance for 2025, aiming for the higher end of the previously stated range. The bank is targeting a return on average assets of 1.1% in the second half of the year and anticipates improved investment banking activity.
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