DA Davidson maintains neutral on First Busey shares, target at $25

Published 26/02/2025, 00:34
DA Davidson maintains neutral on First Busey shares, target at $25

Tuesday, First Busey Corporation (NASDAQ:BUSE), a financial services company with a market capitalization of $1.36 billion, maintained its Neutral stock rating and a $25.00 price target according to DA Davidson. Trading at $23.93, InvestingPro analysis suggests the stock is currently undervalued. The rating affirmation follows recent developments at the company, including the unexpected departure of the bank’s CFO last week. Despite the timing coinciding closely with the anticipated completion of the acquisition of Cummins (NYSE:CMI) Facility Services (CFB), the bank clarified that the CFO’s exit was not related to the impending deal.

The company has initiated a national search to find a permanent replacement for the CFO position and has arranged interim support to ensure continuity. DA Davidson’s analyst noted the departure as a unique event given its proximity to the CFB transaction’s expected closing date. The bank’s leadership and financial position were discussed positively during DA Davidson’s Midwestern Bank Summit held the previous week, suggesting a stable outlook. This stability is reflected in the company’s impressive 37-year streak of consecutive dividend payments, currently yielding 4.18%, and four analysts have recently revised their earnings expectations upward.

In light of these events, DA Davidson has made minor adjustments to their earnings model for First Busey. However, the firm’s stance on the stock remains unchanged, with the price target reflecting a steady view of the company’s value. The analyst’s commentary indicates a watchful approach, as the bank navigates through the executive transition and the integration of the CFB deal.

Investors and market watchers will be keeping an eye on First Busey’s executive search progress and any potential impact the CFO’s departure may have on the company’s financial strategy and the final stages of the CFB acquisition. The company’s stock performance and future outlook will likely hinge on the successful management of these changes and the continued execution of its business plan. For deeper insights into First Busey’s financial health and additional exclusive analysis, InvestingPro subscribers can access more than 30 key financial metrics and additional expert tips.

In other recent news, First Busey Corporation has made notable executive changes, with the departure of Jeffrey D. Jones as Executive Vice President and Chief Financial Officer. Scott A. Phillips has been appointed as the Interim CFO, bringing over 20 years of experience to the role. The company also announced a 4.2% increase in its quarterly cash dividend, raising it to $0.25 per share, effective for shareholders on record as of January 24, 2025. This move demonstrates First Busey’s commitment to providing value to its shareholders.

In terms of analyst evaluations, Stephens has adjusted its price target for First Busey to $26 from $29, while maintaining an Equal Weight rating, following the company’s fourth-quarter results. DA Davidson also revised its outlook, lowering the price target to $25 from $28, but keeping a Neutral rating, citing a conservative outlook on net interest income. The Federal Reserve has approved First Busey’s pending merger with CrossFirst, which is expected to finalize by March 1, 2025, with analysts expressing confidence in the company’s acquisition integration capabilities.

Despite some challenges, such as subdued loan growth and a slight miss in net interest margin, First Busey’s wealth management fees have shown a significant increase. Analysts from DA Davidson noted the company’s clean credit situation as a key factor in its earnings performance, allowing for reduced provision expenses. Looking forward, there is anticipation of improvement in financial results with the completion of the CrossFirst acquisition, which could enhance First Busey’s financial standing.

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