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On Thursday, Keefe, Bruyette & Woods adjusted their outlook on BCB Bancorp (NASDAQ:BCBP), reducing the price target from the previous $12.50 to $10.50. Despite the change in price target, the firm maintains a Market Perform rating on the stock.
The revision follows BCB Bancorp’s recent financial results, which included a significant $13.7 million specific reserve and higher credit costs associated with their Business Express segment. These factors led to a notable earnings miss for the first quarter and resulted in the stock price declining by 7.2% since the earnings report, in contrast to a 5.4% gain observed among Keefe, Bruyette & Woods’ industry peers.
Keefe, Bruyette & Woods has revised their earnings estimates downward, citing a need for caution in their financial modeling. The new estimates for BCB Bancorp’s earnings per share are now $0.15 for the year 2025 and $1.48 for 2026. These adjustments reflect the impact of the reserve and elevated credit costs.
The analyst firm acknowledges that the turnover of the Business Express portfolio is nearing completion, which could potentially lead to reduced credit costs in the second half of 2025 and into 2026. However, they caution that the stock remains a "show me" story, suggesting that investors will likely require solid evidence of improvement before the valuation gap with peers begins to close.
The revised price target of $10.50 is based on 0.6 times the forward tangible book value (TBV), indicating a conservative approach to BCB Bancorp’s valuation in light of recent challenges and the need for the company to demonstrate a turnaround in its credit performance. The stock currently trades at 0.52 times book value, reflecting these concerns. For deeper insights into BCB Bancorp’s valuation metrics and 10+ additional exclusive ProTips, consider subscribing to InvestingPro.
In other recent news, BCB Bancorp reported an $8.3 million net loss for the first quarter of 2025, a significant shift from the $5.9 million net income recorded in the same period last year. The loss was primarily due to a $13.7 million reserve for a loan in the cannabis sector and increased reserves for the discontinued Business Express Loan portfolio. Despite this financial setback, the company declared a quarterly cash dividend of $0.16 per share. Additionally, BCB Bancorp issued 52 shares of its Series K Noncumulative Perpetual Preferred Stock in a private placement, raising $520,000 in gross proceeds. DA Davidson analyst Manuel Navas recently revised the price target for BCB Bancorp to $11.00, down from $14.00, while maintaining a Neutral rating. Navas cited weaker net interest income and higher operating expenses as reasons for the lower target, noting that the bank’s loan-to-deposit ratio remains high at 110%. He also mentioned that 2025 is expected to be a transition year for BCB Bancorp as it focuses on improving profitability and navigating through elevated non-performing assets. The company’s strategic initiatives and financial performance continue to be closely monitored by investors and analysts.
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