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On Thursday, DA Davidson analyst Gary Tenner upgraded Pacific Premier Bancorp (NASDAQ:PPBI) stock from ’Buy’ to ’Neutral’ and set a price target of $23.00. The adjustment came in response to the announcement of a merger agreement between Pacific Premier Bancorp (NASDAQ: PPBI) and Columbia Banking System (NASDAQ: NASDAQ:COLB), a transaction valued at approximately $2 billion. Columbia Banking System, with its current market capitalization of $4.94 billion, has shown resilience with a 30% return over the past year, according to InvestingPro data.
Tenner noted that while the timing of the deal was unexpected due to the current economic uncertainty and the challenges faced by the banking sector, the potential sale of PPBI was not surprising. The merger agreement offers a modest premium of 3.5% over PPBI’s closing price on April 23, and the valuation stands at 1 times tangible book value (TBV). This aligns with COLB’s current price-to-book ratio of 0.97x and attractive P/E ratio of 8.15x. InvestingPro analysis suggests COLB is currently trading near its Fair Value, with additional insights available in the comprehensive Pro Research Report.
Pacific Premier Bancorp has encountered earnings and growth headwinds since achieving its peak earnings per share (EPS) of $3.47 in 2021 and its highest asset value of $22 billion in mid-2022. Tenner believes that despite the low premium and valuation, the merger could be beneficial for PPBI shareholders.
The revised rating and price target for Pacific Premier Bancorp are now in line with DA Davidson’s existing rating and price target for Columbia Banking System. This adjustment reflects the analyst’s view of the merger’s potential to create value for the shareholders of both institutions.
In other recent news, Columbia Banking System Inc. reported its first-quarter 2025 earnings, which exceeded analysts’ expectations. The company posted an operating earnings per share (EPS) of $0.67, surpassing the forecasted $0.63, and revenue of $491.37 million, above the expected $482.62 million. Columbia Banking also announced a significant acquisition of Pacific Premier Bancorp, which is anticipated to enhance its market presence, especially in Southern California. The acquisition is expected to provide a strategic boost to Columbia Banking’s product offerings and market share. Analysts have projected a 14% EPS accretion in 2026 and a 15% increase in 2027 following the acquisition. Despite the positive earnings and acquisition news, Columbia Banking’s stock experienced a decline of 3.06% in aftermarket trading. The company continues to focus on optimizing its financial performance and plans to open its first retail branch in Colorado as part of its strategic growth initiatives.
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