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Investing.com - Piper Sandler reduced its price target on First Internet Bancorp (NASDAQ:INBK) to $22.00 from $25.50 on Monday, while maintaining a Neutral rating on the stock. Currently trading at $19.86, InvestingPro analysis suggests the stock is undervalued, despite a steep 41.7% decline year-to-date.
The price target reduction follows First Internet Bancorp’s third quarter results, which Piper Sandler described as "another difficult credit quarter." The bank experienced its fourth consecutive quarter of elevated net charge-offs (NCOs) related to SBA and franchise finance loans. This aligns with InvestingPro’s analysis showing weak financial health metrics, with an overall score of 1.46 out of 5.
Piper Sandler lowered its fourth quarter 2025 earnings per share estimate to $0.62 from $0.82 and its 2026 estimate to $4.40 from $4.60, primarily reflecting more conservative expectations for SBA gain-on-sale income. The firm also established a 2027 earnings estimate of $5.20 per share.
The new price target is based on approximately 0.50 times Piper Sandler’s one-year forward tangible book value estimate, down from approximately 0.60 times previously. This valuation reduction reflects what the firm called an "ongoing credit overhang, tighter capital levels and suboptimal profitability prospects."
Piper Sandler noted that while management is taking positive steps to improve the bank’s profitability profile, First Internet Bancorp’s valuation will likely remain below peers until more consistent and improving asset quality metrics emerge. Despite these challenges, the bank has maintained dividend payments for 14 consecutive years. For deeper insights into INBK’s financial health and valuation metrics, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, First Internet Bancorp reported disappointing financial results for the third quarter of 2025. The company posted an earnings per share (EPS) loss of $1.43, significantly missing the expected EPS of $0.63. This marked a surprising deviation of -326.98%. Additionally, First Internet Bancorp’s revenue fell short of forecasts, coming in at $43.5 million compared to the anticipated $45.48 million. Following these results, Keefe, Bruyette & Woods (KBW) adjusted its price target for the company, lowering it from $27.00 to $25.00 while maintaining a Market Perform rating. The reduction in the price target was attributed to ongoing credit issues in the company’s small business and franchise finance portfolios. These developments have raised concerns among investors regarding the company’s financial health.
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