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On Monday, DA Davidson analyst Manuel Navas maintained a Buy rating on Business First Bancshares (NASDAQ:BFST), a regional bank with a market capitalization of $823 million, maintaining a steady price target of $34.00. Following the company's successful acquisition of Oakwood, Business First Bancshares reported a positive pre-provision net revenue (PPNR) surprise, driven by an increase in net interest income (NII), fees, and operational expenditure efficiency. The bank showcased a strong net interest margin (NIM) growth of 10 basis points and reported robust organic loan and deposit growth of 5% and 11%, respectively, while maintaining steady revenue growth of 6.05% over the last twelve months.
Shares of Business First Bancshares, which had been down 5% year-to-date compared to the KBW Regional Banking Index (KRX) before the earnings report, saw a significant rise of 8% after the PPNR beat. According to InvestingPro, the stock has demonstrated strong momentum with a 20.72% return over the past year and currently trades at an attractive P/E ratio of 12.2x. The analyst's expectations for 2025 have increased as both NII and Fees are anticipated to continue improving. With NIM expected to keep expanding and Fees growing due to recent acquisitions, Navas believes that the current 1.4 times price to tangible book value (P/TBV) presents an attractive entry point for investors, especially considering Business First Bancshares' above-peer loan growth and approximately 41% Texas exposure following the Oakwood deal.For deeper insights, InvestingPro subscribers can access additional analysis, including 7 more ProTips and a comprehensive Fair Value assessment that suggests the stock is currently undervalued.
The analyst's reiteration of the Buy rating is backed by the 23% upside seen in the stock, signaling confidence in the bank's future performance. The positive outlook is largely attributed to Business First Bancshares' strong financial results and strategic acquisitions, which have positioned the company for continued growth in the competitive banking sector. Notable strengths identified by InvestingPro include a seven-year streak of consecutive dividend increases and recent upward earnings revisions by analysts, supporting the bank's robust financial health rating.
In other recent news, Business First Bancshares has been upgraded from Market Perform to Outperform by Raymond (NSE:RYMD) James, based on expectations of improved profitability. This optimistic outlook is largely attributed to the bank's recent acquisition of Oakwood Bancshares, which is projected to enhance profitability beyond that of its peers. Key financial indicators such as net interest margin (NIM) and net interest income (NII) are solid, and the bank's loan growth outlook is favorable.
The bank's substantial presence in Texas, accounting for approximately 35% of its loans and 17% of its deposits, is seen as a contributing factor to its growing franchise and scarcity value. Despite areas of concern, including a lower concentration of demand deposit accounts (DDAs) and low-cost core deposits, Raymond James believes Business First Bancshares is well-positioned for growth.
In terms of financial metrics, the bank's efficiency ratio is reported to be lower than its competitors, and its expense growth in 2026 is projected to be below that of its peers. These recent developments underscore the bank's potential for both organic growth and growth through potential mergers and acquisitions.
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