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Tuesday, Jefferies began coverage on First Foundation shares (NYSE:FFWM), assigning a Buy rating and setting a price target of $7.00. The research firm’s analysts indicated that their positive outlook is based on their belief that First Foundation is approaching a pivotal moment in its journey towards sustained profitability. This presents an attractive opportunity for investors, especially as the stock is currently trading at $5.30, with a price-to-book ratio of 0.45, significantly below tangible book value (TBV). According to InvestingPro data, the stock has fallen over 30% in the past six months, potentially creating a value opportunity.
The analysts highlighted that First Foundation has fortified its capital base, which is a critical factor for the financial institution’s stability and growth potential. While they noted that the company has maintained robust credit quality, InvestingPro’s Financial Health Score currently rates the company as WEAK, suggesting investors should closely monitor the company’s fundamentals. The platform offers additional insights through its comprehensive Pro Research Report, available for over 1,400 US stocks.
A significant factor contributing to Jefferies’ optimistic stance is the anticipated expansion of the net interest margin for First Foundation in the upcoming years. Net interest margin is a key indicator of a bank’s profitability, as it reflects the difference between the income generated from interest-bearing assets and the expenses associated with paying out interest on deposits. While the company wasn’t profitable in the last twelve months, InvestingPro analysis indicates expected profitability in 2025, with forecasted earnings per share of $0.19.
The initiation of coverage by Jefferies comes at a time when First Foundation is positioned to leverage its strengthened capital and credit quality to enhance shareholder value. The $7.00 price target implies a level of confidence in the company’s potential for growth and earnings improvement.
Investors and market watchers will likely keep a close eye on First Foundation’s performance indicators in the near future, as the company endeavors to meet the expectations set forth by Jefferies’ analysis. The stock’s movement in the market following this new coverage will be of particular interest to those considering an investment in First Foundation.
In other recent news, First Foundation Inc . reported a strong financial performance for the first quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share of $0.09, significantly above the projected $0.015, and reported revenue of $71.3 million, exceeding the anticipated $63.85 million. This marks a return to profitability for First Foundation, with a net income of $6.9 million, after a net loss in the previous quarter. The company also highlighted a strategic focus on reducing its commercial real estate concentration and completed a $489 million multifamily loan sale. Analysts at Raymond (NSE:RYMD) James noted the company’s strategic direction and expressed optimism about its future performance. First Foundation’s strategic initiatives, including a reduction in non-interest expenses by $5 million compared to the last quarter of 2024, played a crucial role in this improved performance. The company anticipates further improvements in its net interest margin, projecting an exit run rate of 1.8-1.9% by the end of 2025.
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