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Tuesday, Jefferies initiated coverage on shares of Cathay General Bancorp (NASDAQ:CATY) with a Buy rating and set a price target of $53.00. The firm’s analyst highlighted the bank’s robust capital position, with a Common Equity Tier 1 (CET-1) ratio of 13.6% reported in the first quarter of 2025, as a key factor underpinning the positive outlook. Currently trading at $44.57 with a P/E ratio of 11.17, the bank’s stock has shown strong momentum over the past month, according to InvestingPro data.
Cathay General’s market focus was also noted as a strength, with its exposure to the high-growth Asian-American demographic expected to drive future performance. Additionally, the bank’s net interest margin outlook is viewed favorably, suggesting a healthy difference between the interest income generated on credit products like loans and mortgages and the interest paid out to depositors. The bank’s commitment to shareholder returns is evidenced by its impressive 35-year streak of consecutive dividend payments, with a current yield of 3.08%.
The analyst at Jefferies addressed investor concerns regarding Cathay General’s exposure to tariffs, suggesting that these fears may be exaggerated. The bank is expected to maintain low net charge-offs, which are debts the bank believes it cannot collect and must declare as a loss, in comparison to its industry peers.
The new price target of $53.00 reflects a confidence in Cathay General’s ability to leverage its strong capital foundation and market positioning to generate value. This target suggests an anticipated upward movement from the bank’s current trading levels.
Investors will be watching closely as Cathay General works to capitalize on its strategic advantages in the coming months, with Jefferies’ coverage now adding to the broader market perspective on the bank’s stock potential. For deeper insights into Cathay General’s financial health and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the bank’s performance metrics and future outlook.
In other recent news, Cathay General Bancorp reported its Q1 2025 earnings, revealing an earnings per share (EPS) of $0.98, which exceeded analysts’ forecasts of $0.95. However, the company’s revenue fell short of expectations, coming in at $186.35 million. Despite the revenue miss, Cathay General Bancorp’s net interest margin improved to 3.25% from 3.07% in the previous quarter. The company also repurchased 876,906 shares at an average cost of $46.83 each, completing its stock repurchase program. Cathay General Bancorp adjusted its loan growth guidance for 2025 to a range of 1% to 4%, down from the previous 3% to 4%, reflecting economic uncertainties and ongoing tariff tensions between the U.S. and China. Analysts from firms like KBW and D.A. Davidson noted the revised loan growth guidance and discussed the potential impact of interest rate cuts on the company’s net interest margin. Additionally, Cathay General Bancorp’s effective tax rate increased significantly due to a decrease in solar tax credit fund investments.
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