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On Tuesday, DA Davidson reiterated its Buy rating on Flagstar Bank (NYSE:FLG) with a maintained price target of $14.50, positioning it within the broader analyst target range of $12.50 to $15.50. According to InvestingPro data, the stock has shown strong momentum with a 33.88% gain year-to-date. Following investor meetings with Flagstar’s management, DA Davidson’s analyst Peter Winter expressed reinforced confidence in the bank’s strategic direction. Winter highlighted the management’s assurance that Flagstar is on course to address its credit issues and is expected to return to profitability by the fourth quarter of 2025, potentially even earlier. This timeline is particularly significant given that InvestingPro analysis shows the company is currently unprofitable with negative earnings per share of -$2.49.
Flagstar Bank’s management team conveyed a shift from a defensive strategy to a more aggressive approach aimed at business growth. This includes a focus on expanding profit margins and growing commercial and industrial (C&I) loans by recruiting additional C&I bankers. The bank also plans to reduce its exposure to the multifamily loan sector.
The analyst’s positive outlook is further supported by Flagstar’s initiatives to optimize its expense base. These efforts are part of the broader plan to improve the bank’s financial performance and shareholder value. The management’s confidence in achieving profitability by the end of 2025 was particularly underscored during the investor meetings. For deeper insights into Flagstar’s financial health and valuation metrics, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
Flagstar Bank’s strategic pivot towards an offensive stance in the market is expected to enhance the bank’s competitive position. By expanding their margin and loan portfolio, while simultaneously managing costs, the bank aims to establish a stronger foundation for future growth.
The reiterated Buy rating and price target from DA Davidson reflect the firm’s belief in Flagstar Bank’s potential for recovery and progress. Investors and stakeholders will be watching closely as the bank works towards achieving its profitability goals in the upcoming quarters.
In other recent news, Flagstar Financial Inc. reported its Q1 2025 earnings, which showed a narrower-than-expected loss. The company posted an adjusted net loss of $0.23 per share, surpassing analysts’ expectations of a $0.28 loss, while revenue came in at $490 million, slightly below the $510.44 million forecast. Additionally, Citi analyst Ben Gerlinger updated the financial outlook for Flagstar Bank, raising the price target to $15.50 from $15.00 and maintaining a Buy rating, reflecting a positive view of the bank’s recent legal actions. Flagstar Bank has taken significant legal steps, including filing a motion for a court-ordered receiver against Pinnacle Group, aiming to address 90 loans originally valued at over $600 million. These legal actions are part of an ongoing strategy to potentially recover funds through property-generated cash flow. The company is also targeting profitability by Q4 2025, with strategic expansions in product offerings and lending capabilities. Furthermore, Flagstar Financial has achieved significant reductions in non-interest expenses, contributing to its improved financial outlook.
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